The Indian economy is likely to grow to 5.7% in 2022 and 4.7% in 2023, the United Nations Conference on Trade and Development, or UNCTAD, has predicted. The organisation said that India’s economy grew 8.2% in 2021.

The UNCTAD, in its Trade and Development Report 2022 released on Monday, said that economic activity in India was being hampered by higher financing cost and weaker public expenditure.

“Going forward, the government has announced plans to increase capital expenditure, especially in the rail and road sector, but in a weakening global economy, policymakers will be under pressure to reduce fiscal imbalances, and this may lead to falling expenditures elsewhere,” the report said.

The UNCTAD took note of the Centre’s Production-Linked Incentive Scheme, under which the government extends incentives of 4% to 6% on incremental sales of goods manufactured in India.

“The Production-Linked Incentive Scheme introduced by the government is incentivizing corporate investment, but rising import bills for fossil energy are deepening the trade deficit and eroding the import coverage capacity of foreign exchange reserves,” the report said.

The UNCTAD also predicted that the world economy is likely to grow 2.6% in 2022 that is 0.9% below the rate predicted in last year’s report. It also said that global growth is expected to slow down further to 2.2% by the end of 2023.

On the report, the Congress said that the Centre was “singularly responsible” for the country’s economic problems, PTI reported. Party spokesperson Anshul Avijit said that the government keeps quoting high-frequency data to hide the real health of the economy, but no one is fooled.

“Inflation remains high, unemployment is increasing and growth estimates are being revised downwards with each passing day,” he said.

India’s gross domestic product grew at 8.7% in 2021-’22 as against a contraction of 6.6% during the last financial year. The figure was less than the 8.9% estimated by the Ministry of Statistics and Programme Implementation.