PHOTO
India’s economic growth is expected to moderate to 6.1% in 2023-24 from the 6.8% estimated for the current fiscal year, reflecting less favorable outlook and tighter financial conditions, the IMF said.
"The war in Ukraine and sanctions on Russia continues to impact the Indian economy through multiple channels, including elevated commodity prices, lower external demand and uncertainty-driven adverse confidence effects," the IMF said in its annual consultation report with Indian authorities.
India's current account deficit is expected to increase to 3.5% of the GDP in FY2022-23 as a result of both higher commodity prices and strengthening import demand, it said.
The fund projected inflation at 6.9% in the current fiscal year, "reflecting near-term uncertainties in food prices and input costs, and relatively sticky core inflation". Inflation is expected to moderate only gradually over the next year.
Credit growth is expected to strengthen, but further financial deepening will be needed to support medium-term economic growth.
The Indian authorities have projected a more optimistic outlook at about 7% in FY2022-23, as they expect government capital spending and private demand to strengthen further in the remainder of the year.
For the current fiscal year, the economy rebounded from the deep pandemic-related downturn. Real GDP grew by 8.7% in FY2021-22, bringing total output above pre-pandemic levels, according to the IMF.
(Writing by Brinda Darasha; editing by Cleofe Maceda)
