The real GDP growth forecast for India has been reduced once again by US rating agency Moody's Investors Services to 7.0% for 2022 from 7.7%, citing "rising inflation, high-interest rates, and weakening global growth will hamper economic momentum by more than originally predicted."
Moody predicts that growth will slow down to 4.8% in 2023 and then accelerate to about 6.4% in 2024. India's projected growth rate of 7% in 2022 will still be higher than China's anticipated growth rate of 3%. India's growth rate in the fiscal year 2021–2022 was 8.7%. (April 2021 to March 2022).
According to the research, the world economy is on the verge of a downturn because of persistent inflation, tightening monetary policy, fiscal problems, geopolitical developments, and financial market volatility. The global economy will begin to slow down in 2023, and this trend will last until 2024. Nevertheless, Moody's predicts that a period of relative stability might start by 2024 if governments and central banks can help their economies get past the current challenges.
Even though it was anticipated that the Indian economy would expand more quickly than many other economies, it would still grow too slowly to create the number of jobs required to lift tens of millions of people out of poverty in a country that is regularly ranked among the worst in the world for hunger. However, the already dim future may get even worse as a slowdown in the world economy increases the likelihood of more falls in the months to come.
The Reserve Bank of India increased the repo rate three times between May and September to combat inflation. The central bank reduced its growth prediction for the time period from an earlier estimate of 7.2% to 7%.
According to Moody's, the RBI would likely increase the repo rate by an additional 50 basis points, or 0.5%, in order to rein in price growth and sustain the currency exchange rate. After the rate increases have a favourable impact on inflationary pressures, the RBI will turn its attention from managing inflation to fostering economic growth, according to Moody's.
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