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Indias Growth at 7.5%

ADB projects India FY23 growth at 7.5%

Elbow room: The ADB expects capacity utilisation rates in Indian industry to improve over the first half of 2022-23. The Asian Development Bank (ADB) forecasts that India’s GDP growth will moderate to 7.5% in 2022-23, from an estimated 8.9% in 2021-22. The multilateral lender, however, sees the pace picking up in 2023-2024 to reach 8%. The ADB has factored in the RussiaUkraine conflict’s implications for India, which would be largely indirect through higher oil prices, and has assumed that the severity of the COVID-19 pandemic would subside with a rise in vaccination rates. Although oil prices will exert upward pressure on inflation, the impact would be moderated by fuel subsidies and oil refineries stocking up on cheap crude from the Russian Federation, the ADB noted, predicting an average inflation rate of 5.8% in 2022-23, and 5% in 2023-24. There would still be an upward pressure on consumer prices with oil prices expected to average more than $100 a barrel through 2022. In its Asian Development Outlook report released on Wednesday the bank stated that food prices were expected to rise in tandem with increasing commodity prices. Higher public capital spending was expected to improve the efficiency of India’s logistics infrastructure, crowd-in private investment, generate jobs in construction and sustain growth, the bank said, emphasising that economic activity this year would hinge on catalytic effects of public investment. The ADB expects capacity utilisation rates in Indian industry to improve over the first half of 2022-23, creating room for fresh investments, as private consumption could pick up amid the ebbing pandemic severity and mobility restrictions.