Despite shifting geopolitical realities around the world, the Indian economy is expected to grow 7.1-7.6 percent in the current fiscal year, according to a report released on Wednesday.
Leading consultancy Deloitte India stated in its India’s economic outlook – July 2022 report that as 2021 came to a close, there was optimism in the air, but that optimism was dashed early this year when a wave of Omicron infections swept through the country and Russia invaded Ukraine in February.
“These events exacerbated pre-existing challenges such as rising inflation, supply shortages, and shifting geopolitical realities around the world, with no clear end in sight.”
“And the subsequent confluence of headwinds such as surging commodity prices and disruption in trade and financial transactions quickly deteriorated economic fundamentals that were trending up just a few months ago,” according to the report.
Rising commodity prices, soaring inflation, supply shortages, and shifting geopolitical realities all weigh on global growth prospects. Nonetheless, India is expected to be the world’s fastest-growing economy, according to the report.
“India is expected to grow by 7.1-7.6% in 2022-23 and 6-6.7% in 2023-24. This will ensure that India remains the world’s fastest-growing economy for the foreseeable future, driving global growth “According to the report.
The Reserve Bank of India (RBI) forecasts 7.2 percent GDP growth for the current fiscal year, which ends in March 2023.
Deloitte India predicts that inflation and supply chain disruptions will persist for some time.
The domestic currency will almost certainly regain some ground against the US dollar, but not until early next year. The INR’s strength will improve as a result of India’s relatively strong recovery and the global slowdown, it added.
On Wednesday, the rupee fell 3 paise to a record low of 79.62 (provisional) against the US dollar.
“Among other factors, the desire of global businesses to look for more resilient and cost-effective investment and export destinations during difficult times could work in India’s favour,” Rumki Majumdar, Economist at Deloitte India, said.
According to the report, uncertainties in the global business ecosystem will pose significant risks