Mumbai, Sep 1,2022: A report by the SBI Ecowrap has now revised its annual GDP growth for FY23 to 6.8 per cent, a large part of which is a statistical adjustment with growth momentum likely to show increasing momentum in the second half of current fiscal.

“The downward revision is mostly to do with our Q1GDP estimate that was at 15.7 per cent,” the report said.

In the first quarter of the current financial year, the Indian economy grew by 13.5 per cent amid rebound in the growth of the service sector. The GVA grew by 12.7 per cent.

Though GDP grew in double digits, but it still came way below the market expectations. The primary culprit was the growth in manufacturing sector, which grew by measly 4.8 still in Q1.

“We strongly believe that the estimation of manufacturing sector growth needs serious introspection in the sense that IIP is still indexed at 2012 base,” the report said.

The CPI basket has also not changed since 2012 and this has also possibly resulted in overstating CPI inflation at multiple times.

The lower growth in Q1 also compounds RBI’s job, with rate hike trajectory in the next two MPC meets trying to find a neutral ground amid growth and inflation.

A lot should depend on emerging inflation prints locally, but if the message from the Jackson Hole summit is a harbinger, the US seems to be bracing for further hardening at elevated pace, with Fed chair Jerome Powell also questioning the sustainability of growth and job markets going ahead, whose robustness has shielded the economy largely, of late.

On the other hand, Eurozone seems to be entering a conflict zone, accentuated by political melodrama in select jurisdictions, even as inflation promises to further spiral up with Russia likely to squeeze gas supply during the ensuing winter to exert a tacit pressure on the block.

Clearly, a fine balancing act by the RBI would be on the anvil, keeping the rupee closer than ever to the centre.