We have revised down our forecast for India’s real gross domestic product (GDP) growth to 7.0% for the current fiscal (2022-23) from 7.3% estimated previously. This is primarily because the slowdown in global growth has started to impact India’s exports and industrial activity.

However, domestic demand remains supportive this fiscal, helped by a catch-up in contact-based services, government capital expenditure (capex), relatively accommodative financial conditions, and overall normal monsoon for the fourth time in a row.

The impact is expected to be more next fiscal (2023-24) as global growth decelerates faster. Additionally, domestic demand could come under pressure as interest rate hikes gets transmitted more to consumers, and the catch-up in contact-based services fades.

Consequently, we expect India’s GDP growth to slow to 6.0% in fiscal 2024, down from 6.5% estimated previously. The risks to the forecast remain tilted downwards.