The Asian Development Bank (ADB) slashed its growth forecast for India’s GDP to 6.3 per cent for financial year 2023 from 6.4 per cent, citing the effects of declining exports and irregular rainfall patterns that could reduce agriculture output.
The Bank’s experts also increased their projected inflation rate for the year from 5 per cent in April’s estimate to 5.5 per cent and kept their real GDP growth projection for 2024–25 at 6.7 per cent, driven by the assumption that private investment and industrial output would increase.
“The prediction for the subregion reduced from April’s estimates of 5.5 per cent and 6.1 per cent to 5.4 per cent and 6.0 for this year and next. This outlook is mostly influenced by India, whose economy makes up a large portion of that of the subregion. According to forecasts, growth for the fiscal year (FY) will continue strong, though slightly slower than anticipated in April,” stated the report.
In July, India’s food inflation resurfaced due to unfavourable weather, which also increased South Asia’s inflation rate. India, which exports more than a third of the world’s rice, increased export limits in July, causing rice prices to soar throughout Asia. India’s headline inflation rate estimated to drop from 6.7 per cent in 2022 to 5.5 per cent in 2023.
“India’s prediction has increased to 5.5 per cent for this year (from April’s forecast of 5.0 per cent) and has decreased to 4.2 per cent for 2024. The cost of fruit, vegetables, and rice increased as a result of the intense monsoon rains. The government has expanded public import buying of pulses and banned rice exports in an effort to slow the rise in food costs,” stated the report.
As vegetable prices somewhat decreased from the prior month, India’s retail inflation decreased to 6.83 percent in August from 7.44 percent in July, according to the National Statistical Office (NSO).