Moody’s Slashes India’s Growth Forecast From 9.1% To 8.8 %

Moody’s slashes India’s growth forecast, from 9.1% to 8.8 percent.

Moody’s Investors Service on Thursday cut India’s economic growth forecast for 2022 to 8.8 percent from 9.1 percent earlier, citing high inflation.

In its update of the Global Macro Outlook 2022-23, Moody’s said high-frequency data suggests that growth momentum from December quarter 2021 has continued over the first four months of this year.

However, the rise in crude oil, food, and fertilizer prices will have an impact on domestic finances and spending in the coming months.

An increase in rates to prevent further normalization of energy and food inflation will slow the pace of recovery in demand.

Moody’s said that we have reduced our calendar-year 2022 growth forecast for India to 8.8 percent from its March forecast of 9.1 percent while maintaining our 2023 growth forecast at 5.4 percent.

Strong credit growth, a large increase in investment intent announced by the corporate sector, and high budget allocation for capital expenditure by the government indicate that the investment cycle is consolidating.

Moody’s slashes India’s growth forecast: The economy appears strong enough to sustain solid growth momentum until further increases in global crude oil and food prices.

Let us inform you that earlier Moody’s had lowered India’s growth forecast for the current year from 9.5 percent to 9.1 percent.

The high fuel and fertilizer import bills were attributed to the government’s capital expenditure.

According to Moody’s Global Macro Outlook 2022-23 (March 2022 update), Russia’s invasion of Ukraine will hurt economic growth.

The rating agency had said that India’s growth is likely to be 5.4 percent in 2023.

Less room for rationalization of GST rates due to inflation.

There is little scope for rationalization of GST rates on goods and services amidst the prevailing inflation and price situation.

The news agency has given this information by quoting sources. Let us inform you that there are four tax slabs in the Goods and Services Tax (GST) system – 5 percent, 12 percent, 18 percent, and 28 percent.

That is, according to these rates, different things are taxed. But, at present, it is being considered to reduce these tax slabs to possibly three.

If this happens, the tax on some items will be increased while on some it will be reduced. On the other hand, if we talk about gold and gold ornaments, then a three percent tax is levied on them.