10.3% To 8.5%: Fitch downgrades India's GDP growth forecast for 2022-23

On account of rising energy prices due to the Russia-Ukraine war, rating agency Fitch slashed India's growth forecast for the next fiscal from 10.3 per cent to 8.5 per cent for 2022-23 on Tuesday.

For the current fiscal, however, the agency has raised India's growth forecast by 0.6 per cent from 8.1 per cent to 8.7 per cent. It further added that with Omicron subsiding, the GDP growth will soon pick up.

The agency in its Global Economic Outlook-March 2022, said, "However, we have lowered our growth forecast for FY 2022-2023 to 8.5 per cent (-1.8 pp) on sharply higher energy prices." Fitch said the post-COVID-19 pandemic recovery is being hit by a potentially huge global supply shock that will reduce growth and push up inflation.

For the Indian economy, Fitch said that the country has not been affected much by the Omicron wave. This is in stark contrast with the first two waves of the Covid-19 pandemic.

Fitch also reduced the world GDP growth forecast from 4.2 per cent to 3.5 per cent.

The western countries have imposed various sanctions on Russia for its invasion of Ukraine.

According to Fitch, these sanctions are not likely to be removed anytime soon. For the unversed, Russia supplies 10 per cent of the world's energy supplies. This includes 12 per cent of oil and 17 per cent of natural gas.

However, petrol and diesel prices in India were raised by 80 and 70 paise per litre respectively. The rates of domestic LPG were also hiked by as much as Rs 50 per cylinder.