new Delhi. Due to the Russia-Ukraine War, the effect of the fire in the crude oil prices in the international market is now affecting the Indian economy. Due to this not only inflation is increasing but the rate of economic growth is also getting affected. This is the reason that rating agency Fitch has reduced India’s growth rate estimate.
Fitch has cut its growth forecast for the new fiscal year 2022-23, starting April 1, 2022, after the increase in energy prices due to the Russia-Ukraine war. The agency has reduced the growth rate for the next financial year from 10.3 per cent to 8.5 per cent.
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Extended Estimates for the current financial year
The agency said that the restrictions have been eased since the outbreak of the ‘Omicron’ form of the corona virus has come down. This has set the stage for accelerating growth in Gross Domestic Product (GDP) in the June quarter this year. The agency has raised the growth rate estimate for the current fiscal by 0.6 per cent to 8.7 per cent.
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Increasing pressure of inflation
Fitch says that we have reduced our forecast for India’s growth rate for 2022-2023 to 8.5 percent (1.8 percent cut) due to rapidly rising energy prices. One of the reasons for the reduction in growth rate is also the increasing pressure of inflation.
Energy supply at risk from sanctions on Russia
The agency said that Russia exports about 10 percent of the world’s total energy needs. In this, the share of natural gas exports is 17 percent and the share of oil is 12 percent. Economic sanctions imposed on Russia by other countries, including the US, after the attack on Ukraine have put energy supplies at risk.
Tags: Crude oil prices, GDP growth, Indian economy, Russia ukraine war
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