Months after India was touted as a bright spot in a gloomy global economy, its GDP growth rate was dragged down to 4.4 per cent due to the impact of a recession. As global headwinds caught up with India, it prompted former RBI governor Raghuram Rajan to call the impact on GDP, a Hindu Rate of Growth. But financial research firm Moody's has delivered some good news, calling the slowdown in GDP growth a temporary phenomenon.
Counting on global recovery
As the Reserve Bank of India has predicted another blow to the pace of growth in the next quarter before a recovery, Moody's went on to say that it might even help tackle demand side pressure. It also mentioned that when Europe and the US eventually take off towards a recovery, it will elevate India's growth which is currently better than most countries. Exports from India will also grow once demand in US and Europe bounces back after the recession.
Domestic consumption a key factor
Moody's also highlighted the advantage India has, thanks to the domestic economy instead of trade being a driving force for growth. Manufacturing and private consumption dropped during the past quarter, and this hit growth in agriculture, which is linked to it. The agency also cited inflation, which in turn triggered a rise in interest rates, as a factor behind the slowdown.
To meet a projection of 7 per cent growth iin FY23, India's GDP needs to rise at a 5 per cent rate in the January-March quarter. This seems unlikely considering the prediction of 4.2 per cent growth made by the RBI itself.
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