New Delhi, March 30 : A day after ICRA sharply cut India’s FY23 GDP growth projections to 7.2 per cent from 8 per cent earlier, India Ratings and Research (Ind-Ra) on Wednesday revised its growth estimate downward to 7-7.2 per cent primarily on account of global geo-political situation arising out of the Russia-Ukraine conflict. India Ratings has presented two scenarios with respect to the FY23 economic outlook basis certain assumptions. While in the first scenario, the crude oil price has been assumed to be elevated for three months, in the second case the crude price has been assumed to be high for six months considering half cost pass-through into the domestic economy in both cases. “Ind-Ra expects GDP to grow 7.2 per cent yoy in scenario 1 and 7.0 per cent yoy in scenario 2 in FY23, compared to its earlier forecast of 7.6 per cent. However, the size of the Indian economy in FY23 will still be 10.6 per cent and 10.8 per cent lower than the FY23 GDP trend value in Scenario 1 and Scenario 2, respectively,” said India Ratings in the report. S l Kumar Sinha, Principal Economist and Director Public Finance at India Ratings noted that consumption demand as measured by private final consumption expenditure (PFCE) has been subdued in FY22, despite sales of select consumer durables showing some signs of revival during the festive season. “Although the January 2022 round of Reserve Bank of India’s (RBI) Consumer Confidence Survey shows that Current Situation Index increased marginally on the back of better sentiments with respect to the general economic situation, it continues to be in the pessimistic zone. The Expectations Index, which captures one year ahead outlook, moderated due to the surge in COVID-19 infection cases in January 2022,” he said. Sinha further said that household sentiments on non-essential/ discretionary spending continue to be subdued. As the consumer sentiment is likely to witness a further dent due to the Russia-Ukraine conflict leading to rising commodity prices/consumer inflation, Ind-Ra expects PFCE to grow at 8.1 per cent and 8.0 per cent in Scenario 1 and 2, respectively, in FY23, as against its earlier projection of 9.4 per cent, he said. The rating agency expects the surge in commodity prices and disruptions in global supply chain caused by the Russia-Ukraine conflict to take a toll on sentiments of large corporates and their capex may be deferred. “Government capex, however, is unlikely to be dented,” India Ratings said. The rating firm further said that while government acknowledges the adverse impact of the Russia-Ukraine conflict on the ongoing Indian economic recovery, it is unlikely to scale down its fiscal support already announced in the FY23 budget. “Even the RBI has so far resisted the temptation to tighten its monetary policy stance, despite retail inflation being close to its upper tolerance level and/or occasionally breaching it,” said India Ratings. NK