New Delhi: Moody’s on Thursday slashed India’s growth estimate for the current year to 9.1%, from 9.5%earlier, saying high fuel and fertiliser import bill could limit the government’s capital expenditure.
The rating agency said Russia’s invasion of Ukraine has significantly altered the global economic backdrop through three main channels – spike in commodities prices, risks to global economy from financial and business disruption and dent in sentiment due to heightened geopolitical risks.
It said Russia is the only G-20 economy that will contract this year and forecast that its economy will shrink 7%in 2022, and 3% in 2023, down from projected growth of 2% and 1.5% respectively, before the invasion of Ukraine. With regard to India, it said the country is particularly vulnerable to high oil prices, given that it is a large importer of crude oil. Because India is a surplus producer of grain, agricultural exports will benefit in the short-term from high prevailing prices.
“High fuel and potentially fertiliser costs would weigh on government finances down the road, potentially limiting planned capital spending. For all of these reasons, we have lowered our 2022 growth forecasts for India by 0.4 percentage point,” Moody’s Investors Service said. pti