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Global Rating Agency S&P Cut India’s Growth to 7.3%

Published on May 20, 2022
Current Context: According to recent projections done by S & P, India’s growth forecast has been reduced to 7.3% from 7.8% (which was estimated earlier).
Global Rating Agency S&P Cut India’s Growth to 7.3%
  • The main reason behind this down forecast is rising inflation due to the Ukraine war.
  • It has also increased its inflation forecast for India by 90 basis points (bps) to 6.3%.
  • The growth for the next fiscal year has been maintained at 6.5%.
  • The rating agency also trimmed the US growth forecast for 2022 to 2.4% while China’s growth forecast stands at 4.2%.
  • It seems to inflation rate remains higher for a longer period they have advised all central banks to raise rates more than what is currently priced in, risking a harder landing, including a larger hit to output and employment.
  • Not only that the United Nations in its latest World Economic Situation and Prospects report has also trimmed down its FY23 growth projection for India to 6.4 %from 6.7% estimated earlier.
  • According to Indian rating and research, Inflation is set to avg to 9-yr high at 6.9% in FY23.
  • It is expected that RBI will increase policy rates to tackle this situation in the upcoming monetary policy committee.

Question:

Q.1 As per S&P India’s growth forecast FY23 reduced to which of the following percentage?
a. 7.2%
b. 6.3%
c. 7.3%
d. 7.8%
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