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S&P Projects India’s GDP Growth At 7.3%

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Indian economic growth in 2023 will get support from domestic demand recovery after the Covid-19 pandemic, as per the report

The American credit rating agency, S&P Global Ratings on Monday estimated India’s economic growth at 7.3 per cent in the current fiscal with downside risks. 

In its economic outlook for Asia Pacific, the agency said that we have retained our growth outlook for India at 7.3 per cent for the fiscal year 2022-2023 and 6.5 per cent for the next fiscal year. 

It also mentioned that inflation is likely to remain above the Reserve Bank of India’s (RBI’s) upper tolerance threshold of 6 per cent till December 2022. 

Indian economic growth in 2023 will get support from domestic demand recovery after the Covid-19 pandemic, the report said. 

Few other agencies have cut India’s gross domestic product (GDP) growth forecast amid higher inflation and rising policy interest rates. 

Earlier, the Asian Development Bank (ADB) downgraded India’s economic growth projection for 2022-23 to 7 per cent from 7.2 per cent.

According to the bank, the step came due to the higher-than-expected inflation in India and monetary tightening by the Reserve Bank of India.

The ADB said in a report that the Indian economy grew 13.5 per cent year-on-year (YoY) in the first quarter of 2022-23, Witnessing strong growth in services.

Fitch also slashed India’s GDP growth forecast to 7 per cent in the financial year 2023 compared with 7.8 per cent in its earlier projection. The move came on the back of a global slowdown and tighter monetary policy. 

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Indices Of India’s Economic Recovery In July Are Contradictory

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As India’s third-largest economy struggles to cope with high inflation, rising borrowing costs, and fears of a global recession, there have been mixed signs of improvement in consumer and business activity in July

As India’s third-largest economy struggles to cope with high inflation, rising borrowing costs, and fears of a global recession, there have been mixed signs of improvement in consumer and business activity in July.

Following weaker sales growth and rising inflation, the purchasing managers’ report revealed that India’s services fell to their lowest level in four months in July.  India’s international service demand deteriorated, counterbalancing the country’s strong manufacturing growth.

The S&P Global India Composite PMI Index fell to 56.6 in July from 58.2 in June as the services sector posted moderate business outlooks. 

The Export Industry 

During the third quarter, India’s trade deficit expanded owing to weak global demand and a tax on fuel shipments, which account for approximately 15 per cent of exports. 

Since the rupee has been weaker than the other Asian currencies in the previous three months, imports have remained near record levels. Approximately one-third of India’s imports are crude oil, accounting for approximately 8 per cent, and coal, accounting for approximately 12 per cent.

Aspects Of Consumer Activity

Two-wheeler sales were up for the second consecutive month despite broad-based growth across all segments. As a result of semiconductor shortages, supply has improved, but automakers warn that the costlier loans may cause a decline in demand.

At the end of July, bank credit reached 14.5 per cent, its highest level in over three years, despite rising interest rates. The banking system’s liquidity remained surplus.

The Industrial Sector

The onset of the monsoons reduced electricity consumption and coal production in June, which negatively impacted factory output and core sector activity. The Index of Industrial Production rose 12.3 per cent in May, reaching a one-year high. As a result, eight of the most important infrastructure industries reported a drop in growth from 19.3 per cent the previous month to 12.8 per cent this month. A one-month lag separates both sets of data.

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Benchmark Indices Snap Six-Day Rally As Reliance, Autos Drop

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The NSE Nifty 50 index fell 0.53 per cent to 16,631, while the S&P BSE Sensex slipped a tad more to 55,766.22, after rising for six straight sessions

Indian shares broke their longest gaining streak since last October on Monday, as automakers slid and index heavyweight Reliance Industries dragged after its earnings fell short of expectations. The NSE Nifty 50 index fell 0.53 per cent to 16,631, while the S&P BSE Sensex slipped a tad more to 55,766.22, after rising for six straight sessions. Last week, the indexes rose more than 4 per cent each in their best performances since February 2021 amid expectations that inflation had peaked, even as markets across the globe geared up for central banks to deliver more rate hikes.

The U.S. Federal Reserve is expected to raise interest rates by another 75 basis points later this week as it looks to tackle stubbornly high inflation, while India’s central bank will meet next week to set the policy roadmap. India’s most valuable company Reliance fell 3.3 per cent on its worst day since July 1, after its first-quarter profit missed estimates due to surge in costs.  Shares of food delivery firm Zomato plunged 11.3 per cent to a record low as a one-year lock-in period for promoters, employees and other investors came to an end following a blockbuster listing last year.

The Nifty Auto index, which had jumped 8 per cent this month up to Friday’s close, slid 1.7 per cent, led by a fall in Mahindra and Mahindra  and top carmaker Maruti Suzuki. Ahead of quarterly results, Nifty 50 component Tata Steel added 2.6 per cent, Axis Bank slipped 0.5 per cent, while Tech Mahindra lost 1.1 per cent. The Nifty Metal index was a bright spot among the sub-indexes, climbing 1.5 per cent to its highest since June 10.

(Reuters)