Bad news for Indian economy, Russia-Ukraine conflict will have a bad effect

Bad news for Indian economy, Russia-Ukraine conflict will have a bad effect

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new Delhi. American brokerage house Morgan Stanley has reduced India’s growth rate forecast for the financial year 2022-23 to 7.9 percent. This brokerage house is known for giving its estimates on the economies of the world. With respect to India, this latest estimate has been given in view of the impact of the Russia-Ukraine conflict on crude oil prices.

Analysts at Morgan Stanley have also raised the inflation forecast in India to 6 per cent. This is the upper level of the Reserve Bank of India’s satisfactory range. Apart from this, due to the current developments, the possibility of recession arising out of inflation has also been expressed.

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“We believe that the current geo-political tensions are exacerbating external risks and also creating potential for an inflation-induced slowdown for the economy,” the brokerage firm said in a statement. It is from the situation when there is stagnation in production or growth and inflation also remains at a high level.

Fear of worsening financial conditions
Analysts, referring to the impact of geo-political tensions on India in various ways, said that the financial conditions are expected to worsen due to rise in oil and other commodities, fall in trade and damage to business sentiments.

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Quite the opposite of another agency’s estimate
On one hand Morgan Stanley has reduced India’s growth forecast, on the other hand rating agency Crisil has said that the Indian economy will grow at 7.8 per cent in 2022-23. CRISIL bases this estimate on the government’s emphasis on infrastructure spending and increased private capital expenditure in 2022-23. However, Russia and Ukraine have not ruled out the risk of slowing growth due to conflict and rising commodity prices. The growth rate of the country is estimated to be 8.9 percent in the current financial year ending on March 31.

Tags: GDP growth, India economy

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