The International Monetary Fund (IMF) has cut India’s Gross Domestic Product (GDP) growth forecast by 0.80 per cent to 7.4 per cent for the current fiscal. Along with this, it has also reduced the growth forecast for the financial year 2024 by 0.80 percent and made it 6.1 percent from the earlier 6.9 percent.
“For India, the change in GDP growth mainly reflects less favorable external conditions and more rapid policy tightening,”the IMF said in its recent World Economic Outlook report released on 26 July.
Russia’s attack on Ukraine in late February disrupted the supply of many vital goods around the world, raising global prices. Due to this, inflation in many countries of the developed world reached its high level in many countries. In order to contain inflation, the central banks of those countries have started tightening their monetary policies.
This has put a lot of pressure on the Indian rupee, which has hit several record lows in recent weeks. Last week, for the first time, the value of the rupee crossed the level of Rs 80 against a dollar.
The Reserve Bank of India (RBI) was forced to increase the interest rates due to all these reasons and due to the persistence of high level of inflation in the country.
So far in the financial year 2023, the RBI has increased its key policy rate – the repo rate by 0.90 per cent and it has now gone up to 4.9 per cent. RBI has indicated an increase in this in the coming months.
Apart from India, the IMF has also cut the GDP growth of China and America. Due to this, the IMF’s global growth forecast for the year 2022 has also come down by 0.40 percent to 3.2 percent. At the same time, it has reduced its global growth forecast by 0.70 percent to 2.9 percent for the year 2023.