India’s GDP growth for the financial year 2022 is projected to be at 8.7pc from 11.1pc forecasted earlier, according to Motilal Oswal Financial Services.
In May when India was hit with the second COVID-19 wave, it led to lockdowns in major states.
Motilal Oswal has altered FY23 GDP growth forecast to 5.4pc from previous forecast of 4pc.
The agency predicts a surge in the Wholesale Price Index (WPI) as opposed to the Consumer Price Index (CPI) as agricultural commodities and industrial metal prices continue to soar.
While CPI inflation for FY21 and FY22 is expected to be at 6.2pc and 5.7pc respectively, the 6pc average inflation of the past two years is unlikely to ease. Judging by this, the RBI is likely to shift towards a neutral stance by the end of this year.
The Indian currency has moved from Rs75 against $1 in mid-April to Rs73in the past few weeks. Higher inflation in the US may create a weakening bias in the Indian Rupee. Thus, the Rupee may see some weakness in the very near term and end the year at around Rs74.5 against the US$, predicts Motilal Oswal.