ADB lowers FY23 GDP forecast to 7.2%

New Delhi: Asian Development Bank (ADB) has lowered the economic growth forecast for India for current fiscal year to 7.2 per cent, with impacts of Covid-19 and Russia-Ukraine war getting exacerbated by high inflation.

In April, the multilateral funding agency had forecast the Indian economy to grow by 7.5 per cent. It also revised downwards the economic growth in fiscal ended March 2022 to 8.7 per cent from 8.9 per cent estimated earlier. India's GDP (gross domestic product) growth moderated to 4.1 per cent in Q4 of fiscal year ended March 2022 on disappointing growth in private consumption and a contraction in manufacturing, ADB said in its supplement to the Asian Development Outlook (ADO) for 2022.

"India has been hit by the omicron Covid-19 variant and the economic impact of the war in Ukraine. Consequently, GDP growth for FY2021 is revised down from 8.9 per cent to 8.7 per cent and from 7.5 per cent to 7.2 per cent for FY2022 (fiscal to be ending in March 2023). Although consumer confidence continues to improve, higher-than-expected inflation will erode consumer purchasing power," says ADO Supplement, which was released on Thursday.

Some of the impacts of this may be offset by a cut in excise duties, the provision of fertilizer and gas subsidies, and the extension of a free food distribution programme, it said.

The economic impact of the pandemic has declined across most of Asia, but we are far from a full and sustainable recovery

-Albert Park, chief economist at ADB