International rating agency S&P Global Ratings has downgraded India’s economic growth forecast for the current fiscal year to 7.3% due to accelerating inflation and a longer-than-expected conflict between Russia and Ukraine. In December 2021, S&P had forecast India’s GDP growth at 7.8% in FY 2022-2023.

S&P’s updated forecast said that inflation will remain high for a long time, which is a cause for concern and requires central banks to take measures to tighten monetary policy. This, in turn, puts pressure on economic growth.

S&P forecasts India’s economy to grow at 6.5% in the next fiscal.

“Risks to our forecasts have intensified and remain persistently downward. The Russia-Ukraine conflict is more likely, we believe, to extend and escalate rather than end early or abate,” S&P said in a statement.

Meanwhile, inflation in India is expected to reach 6.9% in the current fiscal year.

After the conflict between Russia and Ukraine began and against the backdrop of rising commodity prices, a number of other agencies also revised their GDP growth forecasts for India. Thus, the World Bank in April worsened its forecast for 2022-2023 to 8% from 8.7%, the IMF – to 8.2% from 9%.

In turn, the Reserve Bank of India last month downgraded its economic growth forecast to 7.2% from 7.8% amid volatile oil prices and supply chain disruptions.

Meanwhile, ratings agency Moody”s Analytics believes India’s economy is recovering from the coronavirus pandemic and does not expect the situation in Ukraine to undermine that recovery.

“After a robust rebound of over 9% in FY2021 ending March 2022, we expect GDP to expand by 8.2% in FY2022, the highest growth among G20 countries,” the agency said in a statement.

At the same time, Moody”s notes that the negative impact on the global economy due to the situation in Ukraine will lead to accelerating inflation and rising interest rates in India, as well as create supply bottlenecks.

“Rising food prices will have a direct impact on inflation, while rising fuel prices will have an even more negative effect,” Moody”s said in a stateme