Rating agency Fitch on Tuesday slashed India’s growth forecast for the next fiscal to 8.5 per cent from 10.3 per cent, citing soaring energy prices and rising inflation on account of the Russia-Ukraine war.

It has revised upwards the GDP growth forecast for the current fiscal by 0.6 percentage points to 8.7 per cent.

“However, we have lowered our growth forecast for FY 2022-2023 to 8.5 per cent (-1.8 percentage points) on sharply higher energy prices,” Fitch said.

For 2023-24, it is estimated at 7 per cent.

In its Global Economic Outlook-March 2022, Fitch said the post-Covid-19 pandemic recovery is being hit by a potentially huge global supply shock that will reduce growth and push up inflation.

“The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. Sanctions seem unlikely to be rescinded any time soon,” the agency said.

Last week, another global rating agency Moody’s had slashed India’s growth estimate for the 2022 calendar year to 9.1 per cent from 9.5 per cent earlier, saying the high fuel and fertiliser import bill could limit capital expenditure.

Russia supplies around 10 per cent of the world’s energy, including 17 per cent of its natural gas and 12 per cent of oil.

“The jump in oil and gas prices will add to industry costs and reduce consumers’ real incomes... Higher energy prices are a given,” Fitch said as it has reduced the world GDP growth forecast by 0.7 percentage points to 3.5 per cent.

International oil prices started rising this year and jumped to a 13-year high of $140 per barrel earlier this month as an aftermath of the Russia-Ukraine war.