S&P Global Ratings on Monday has lowered its growth forecast of the Indian economy for this fiscal and 2023-24.

The rating agency said growth in the current fiscal will be lower at 7 per cent against its earlier forecast of 7.3 per cent, down 30 basis points. In 2023-24, growth will fall to 6 per cent from 6.50 per cent, the earlier forecast The Indian economy grew 8.5 per cent in 2021.

In its quarterly economic update for Asia-Pacific, S&P said in some countries the domestic demand recovery from Covid has further to go and this should support growth next year in India.

It projected inflation to average 6.8 per cent in the current fiscal and the RBI’s benchmark interest rate to rise to 6.25 per cent by March.

India’s wholesale and retail inflation fell in October after remaining high for most of the year, mainly due to supply chain disruptions following the outbreak of the Russia-Ukraine war in February.

S&P joins a host of agencies that have slashed India’s economic growth projections for current fiscal year citing slowdown in global economy, Russia-Ukraine war, besides rising interest rates and inflation domestically.

While the World Bank has pared its growth estimate for India by 100 basis points to 6.5 per cent, IMF has trimmed it to 6.8 per cent from 7.4 per cent. Asian Development Bank has cut projection to 7 per cent from 7.5 per cent. RBI expects growth to be at 7 per cent in this fiscal year.

Bank credit

Fitch Ratings on Monday said India’s bank credit will see strong growth in the current financial year despite higher interest rates. It said the strong loan growth should benefit net revenue, particularly as it will be coupled with wider net interest margins.

“We see bank credit expanding around 13 per cent in FY23, up from 11.5 per cent in FY22. The normalisation of economic activity will drive the acceleration and high nominal GDP growth, which we expect to boost demand for loans,” Fitch said.