NEW DELHI, Oct. 6 (Xinhua) -- The World Bank on Thursday downgraded India's economic growth forecast to 6.5 percent for the current fiscal year (2022-23) from its earlier estimate of 7.5 percent announced in June.
The international financial institution cited the deteriorating international environment for the downgrade.
"The Indian economy will slow down in FY23, coming off a strong but incomplete recovery in FY22 (April 2021-March 2022). The spillovers from the Russia-Ukraine war and the global monetary policy tightening cycle weigh on India's economic outlook," the report said.
Elevated inflation on the back of higher prices of key commodities, heightened global uncertainty, and rising borrowing costs will affect domestic demand while slowing global growth inhibits India's export growth, it said.
In its biannual report on South Asia, the World Bank said the Indian economy is expected to grow up to 7.0 percent in the next fiscal year (2023-24), before settling down to 6.1 percent in 2024-25.
This is the third time that the World Bank has revised its growth forecast for India in the current financial year. In April, the financial body revised India's projected economic growth to 8 percent from the previous estimate of 8.7 percent in January.
"Despite improved balance sheets of banks and corporate sector, increased capacity utilization in manufacturing, and production linked incentive scheme, private investment will be dampened by heightened global uncertainty, elevated input prices and rising borrowing costs," the report said.
"Private consumption growth will be constrained by high inflation and persisting weakness in some sections of the labor market," it said. ■