India's GDP estimated to grow at 7.4% in FY23: FICCI Economic Outlook Survey

The country's gross domestic product (GDP) is expected to grow 7.4 per cent in the current financial year 2022-23, according to the FICCI Economic Outlook Survey released. The survey estimates a minimum and maximum growth of 6.0 per cent and 7.8 per cent, respectively, with rising prices triggered by the Russia-Ukraine conflict posing as the biggest challenge to the global economic recovery

It also forecasts the median growth for agriculture and allied activities about at 3.3 per cent for 2022-23. Industry and services sectors are estimated to grow by 5.9 per cent and 8.5 per cent, respectively.

According to the survey, the Reserve Bank of India (RBI) is likely to start a rate hike cycle in the second half of 2022, while a repo rate hike of 50-75 bps is expected by the end of the current fiscal.

The RBI is expected to continue supporting the ongoing economic recovery by keeping the repo rate unchanged in its April policy review, the survey said.

However, the survey also added that the downside risks to growth remains escalated. While the threat from the COVID-19 pandemic is still looming, the continuation of Russia-Ukraine conflict is posing a significant challenge to global recovery, the survey said.

Rising international commodity prices is the biggest risk emanating from the ongoing conflict as Russia and Ukraine are global suppliers of key commodities, it said. The conflict, if continues for a longer period, will further hit supplies of major raw materials, including crude oil, natural gas, food, fertilizers, and metals, it added.

The FICCI's Economic Survey projected CPI-based inflation at 6.0 per cent in Q4 2021-22 and 5.5 per cent in Q1 2022-23. It also said that the median forecast of 5.3 percent for 2022-23 for CPI-based inflation may fluctuate between a range of 5.0 percent and 5.7 percent, respectively.

Meanwhile, the survey expects some respite in CPI-based inflation in the forthcoming fiscal year, which has been treading above the targeted range of the RBI in January-February 2022.

With India being a net importer to meet its energy requirements, the sharp rise in crude prices represents a significant shock to India's macro-economic framework. Moreover, the impact on economy is expected to be more serious if the conflict prolongs, the survey said.

The Ficci's Economic Outlook Survey was conducted in March this year to gauge the response from economists representing sectors like industry, banking and financial services. The economists were asked for their forecast on key macro-economic variables for 2022-23, Q4 (January- March) of FY22 and Q1 (April-June) of FY23, it said.