Domestic rating agency Crisil on Friday lowered its real GDP growth forecast for India to 7.3 per cent in FY23 from 7.8 per cent estimated earlier. It attributed the downward revision to higher oil prices, slowing of export demand and high inflation. This is in line with the RBI’s estimate of 7.2 real GDP growth for this fiscal year.

Crisil said there are a slew of negatives like high commodity prices, elevated freight prices, drag on exports as global growth projections get lowered, and the largest demand side driver of private consumption remaining weak.

“The only bright spots are the uptick in contact-intensive services and forecast of a normal and well-distributed monsoon,” it said, lowering its growth outlook. Inflation, which has been pegged to average at 6.8 per cent in FY23 as against 5.5 per cent in FY22, reduces purchasing power and would weigh on revival of consumption — the largest component of GDP which has been backsliding for a while, the agency said.

Factors contributing to the broad-based rise in inflation will include the impact of this year’s heatwave on domestic food production, coupled with persisting high international commodity prices and input costs, it said.