The median growth forecast for agriculture and allied activities has been put at 3.3 per cent for 2022-23. On the other hand, industry and services sector are anticipated to grow by 5.9 per cent and 8.5 per cent respectively during this fiscal.

The current conflict is expected to further aggravate the price rise through imported commodities. The estimate for average wholesale price index-based inflation in Q4 2021-22 has been put at 12.6 per cent, the report said.

Consumer price index-based inflation has been treading above the targeted range of the Reserve Bank of India in Jan-Feb 2022 and should see some respite in the forthcoming fiscal year. The unsustainably high international commodity prices are expected to level off going forward.

The demand situation is yet to move back to pre-pandemic levels and any further spread of the conflict situation in Ukraine could worsen global economic situation, respondents said. Trade is already being disrupted by a relapse in supply side leakages and stress on already high global commodity prices has also aggravated.

Rising international commodity prices are the biggest risk emanating from the ongoing conflict as Russia and Ukraine are global suppliers of key commodities. Prolonging of this conflict will further hit supplies of major raw materials, including crude oil, natural gas, food, fertilizers and metals, the FICCI survey found.

Survey respondents felt global inflation is likely to peak out in the first half of 2022 and moderate thereafter. The easing in price levels in the second part of the year will be backed by a slowing Chinese economy and overall moderation in global growth momentum, waning pent up demand, and monetary policy normalization, rate hikes by the US Federal Reserve.

The impact on India’s economy is expected to be more serious if the conflict prolongs, according to the respondents, who felt inflation continues to be the most significant risk for India as well.

The Russia-Ukraine crisis has amplified the cost pressures being faced by producers. This will further postpone private investment as average capacity utilization remains below the level that could trigger new investments. Limited ability to pass on rising cost of inputs is eroding profitability of businesses. The cost escalation may hit the cash flow going ahead and is weighing heavy on their capital expenditure plans, FICCI said in a press release citing the report.

But despite the challenges, the Indian economy remains well placed over the medium term.

Fibre2Fashion News Desk (DS)