The global rating agency Moody’s on Thursday cut down India’s economic growth forecast to 9.1% from 9.5% in 2022, owing to rising fuel and commodity prices, according to PTI.
After Russia invaded Ukraine on February 24, international oil prices on February 24 had crossed the $100 per barrel mark for the first time in seven years. Higher costs are detrimental to India as it imports 85% of its crude oil.
“High fuel and potentially fertilizer costs would weigh on government finances down the road, potentially limiting planned capital spending,” Moody’s said in its Global Macro Outlook 2022-23 report.
It also noted that India being a surplus producer of grain, will benefit from the rising prices in agricultural exports for a short while.
Meanwhile, Moody’s estimated year-end inflation to stand at 6.6%.
India’s retail inflation for February rose to 6.07%, breaching the upper margin of the limit of the price rise indicator set by the Reserve Bank of India. The central bank aims to keep retail inflation within the range of 2% to 6%.
The rating agency expects India to expand 5.4% in 2023.