Fitch slashes India's FY23 GDP growth forecast to 7% on slowing global economy, rising interest cost
New Delhi (PTI): Fitch Ratings on Thursday slashed India's GDP growth projection for FY23 to 7 per cent, saying the economy is expected to slow against the backdrop of global economy, elevated inflation and high interest rate.
In June, it had forecast 7.8 per cent growth for India.
“We expect the economy to slow, given the global economic backdrop, elevated inflation and tighter monetary policy. We now expect the economy to grow 7 per cent in the financial year to end-March 2023 (FY23) from 7.8 per cent previously, with FY24 also slowing to 6.7 per cent from 7.4 per cent before,” Fitch said in its September edition of the Global Economic Outlook.
As per official GDP estimates, the Indian economy expanded 13.5 per cent in June quarter, higher than 4.10 per cent growth clocked in January-March.
The RBI expects the economy to grow 7.2 per cent in current fiscal year.
The rating agency said, inflation moderated in August as crude oil prices eased but the risk to food inflation persists, given negative seasonality towards the end of this year.
The wholesale-price based inflation softened to an 11-month low of 12.41 per cent in August, even though retail inflation inched up to 7 per cent.
Fitch said that the RBI has already front-loaded its policy rate hikes, tightening by a total of 140 basis points since the start of 2022 to 5.4 per cent in August.
“We expect the RBI to continue raising, to 5.9 per cent, before year-end. The RBI remains focused on reducing inflation, but said that its decisions would continue to be calibrated, measured and nimble and dependent on the unfolding dynamics of inflation and economic activity. We therefore expect policy rates to peak in the near future and to remain at 6 per cent throughout next year,” Fitch said.
The US-based agency said that it expects the rupee value to remain at 79 against the US dollar by the end of 2022, while the retail inflation is expected to remain at around 6.2 per cent.
It said supply shocks and inflation are hitting the world economy hard and expects the world GDP to grow by 2.4 per cent in 2022, revised down by 0.5 percentage points.
In 2023, the world GDP will grow by just 1.7 per cent, 1 percentage points lower than previous estimates.
“The eurozone and UK are now expected to enter recession later this year and the US is expected to suffer a mild recession in mid-2023,” Fitch said.
Speaking on China, it said the recovery is constrained by the pandemic restrictions and a prolonged property slump, while projecting growth to slow to 2.8 per cent this year and recover to only 4.5 per cent next year.
“We've had something of a perfect storm for the global economy in recent months, with the gas crisis in Europe, a sharp acceleration in interest rate rises, and a deepening property slump in China,” said Brian Coulton, Chief Economist, Fitch Ratings.
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NDA sweeps bypolls to four assembly segments in Bihar
Patna (PTI): The ruling NDA in Bihar on Saturday swept the bypolls to four assembly segments, retaining Imamganj and wresting from the INDIA bloc Tarari, Ramgarh and Belaganj, receiving a boost ahead of the assembly elections due next year.
Candidates of the Jan Suraaj, floated recently by former political strategist Prashant Kishor with much fanfare, lost deposits in all but one seat, in a clear indication that the fledgling party, despite claims of taking the political landscape in the state by storm, needs to cover much ground.
The biggest setback for the INDIA bloc, helmed by the RJD, came in Belaganj, a seat the party had been winning since its inception in the 1990s, but this time lost to the JD(U) headed by Chief Minister Nitish Kumar, the arch-rival of its founding president Lalu Prasad.
The JD(U) candidate Manorama Devi, a former MLC, defeated by a margin of more than 21,000 votes RJD’s Vishwanath Kumar Singh who made his debut from a seat that fell vacant upon election to Lok Sabha of his father Surendra Prasad Yadav, a multiple term MLA.
The margin of victory was greater than the 17,285 votes polled by Mohd Amjad of Jan Suraaj, whom the RJD may have liked to blame for its defeat by causing a split in Muslim votes.
JD(U) national spokesman Rajiv Ranjan Prasad said, "The people of Bihar deserve kudos for rejecting the negativity of the opposition and reposing their trust in Chief Minister Nitish Kumar. Under his leadership, the NDA will win more than 200 seats of the 243-strong assembly in 2025."
The RJD also suffered an embarrassing defeat in Ramgarh, where Prashant Kishor’s prediction of the party “finishing third or fourth” came true. The forecast had caused Sudhakar Singh, son of state RJD president Jagadanand Singh, the MP from Buxar who had won the assembly seat in 2020, to threaten that Jan Suraaj cadres in the constituency will be “beaten up with sticks”.
Singh’s younger brother Ajit finished a distant third after BJP winner Ashok Kumar Singh, a former MLA, and Satish Kumar Singh Yadav who fought on a ticket of the BSP, which has little foothold in Bihar.
Jan Suraaj, though, was hardly a factor in Ramgarh, where its candidate Sushil Kumar Singh polled less than four per cent votes.
The BJP also pulled off a stunning victory in Tarari, which falls under the Arrah Lok Sabha seat, currently represented by CPI(ML)’s Sudama Prasad, who had won the assembly segment for two consecutive terms.
CPI(ML) candidate Raju Yadav lost, by a margin of a little over 10,000 votes, to BJP debutant Vishal Prashant, better known as the son of local strongman Sunil Pandey, who was formerly with the JD(U) and had joined the saffron party a few months ago.
Jan Suraaj had initially announced that it was fielding a former Vice Chief of the Army in Tarari but later disclosed that he could not contest because of technical reasons. Its candidate Kiran Singh got less than four per cent votes.
The most respectable performance from Jan Suraaj came in the reserved Imamganj seat where its candidate Jitendra Paswan stood third, polling well over 20 per cent votes.
The seat, however, went to Deepa Kumari, daughter-in-law of Union minister Jitan Ram Manjhi, who defeated RJD’s Raushan Kumar by a slender margin of less than 6,000 votes.
Manjhi, who heads the Hindustani Awam Morcha, vacated Imamganj earlier this year upon getting elected to Lok Sabha from Gaya.
With the exception of Ashok Singh in Ramgarh, the winners in all the seats shall be making their debut in the state assembly.
