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India forecasts slower GDP growth of 7% for 2022-2023 fiscal year

Result would be below previous year's 8.7% but still among world's fastest

A market in the old quarters of Delhi: India's economy is expected to grow 7% for the 2022-2023 fiscal year.   © Reuters

NEW DELHI (Reuters) -- India's government expects economic growth to slow in the financial year ending March, as pandemic-related distortions ease and pent-up demand for goods slows going into 2023.

Gross domestic product (GDP) will likely rise 7% this fiscal year, compared with 8.7% the previous year, the Ministry of Statistics said in its first estimate for the period.

The preliminary projection is much lower than the government's earlier forecast of 8%-8.5%, but above the central bank's projection of 6.8%.

The government uses the advanced GDP estimates as a base to work out its economic growth and fiscal projections for the next budget due on Feb. 1.

February's will be the last full budget before Prime Minister Narendra Modi is expected to bid for a rare third term in elections due in summer 2024.

India's economy rebounded after COVID-19 restrictions were eased around mid-2022, but the war in Ukraine has spurred inflationary pressures, prompting the central bank to reverse the ultra-loose monetary policy it adopted during the pandemic years.

It has raised key interest rates by 225 basis points since last May to 6.25%, the highest in three years, and another modest hike is expected early this year.

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