New Delhi, Sep 01, 2022, By Special Correspondent

New Delhi, Sep 1: Despite Moody's grim foreboding, the BJP Thursday that the Indian economy is not only on track but is galloping ahead like a "bullet train" and cited a boost in the domestic private demand to assert that people's income and employment are on the rise.

The BJP's bold statement came hours after Moody's Investors Service slashed India's economic growth projection for 2022 to 7.7 per cent, citing dampening of economic momentum in coming quarters on rising interest rates, uneven monsoon, and slowing global growth. This is a sharp 1.1 percentage points cut from the growth projection of 8.8 per cent for current year made in May by Moody's.

 

However, BJP spokesperson Syed Zafar Islam took a swipe at opposition leaders for spreading "negativity" about the Indian economy with their regular tweets and added they have been silent for some time as economic indicators are showing its strength. He also refuted claims that the unemployment rate has risen in India and said it is in fact falling.

 

Opposition leaders, including Rahul Gandhi, have often alleged that unemployment has been rising. BJP MP Varun Gandhi on Thursday also joined the criticism and cited the Centre for Monitoring Indian Economy (CMIE) data to claim that employment rate among the youth has hit a five-year low.

  

India's economy grew by 13.5 per cent in the first quarter of the current fiscal, mainly due to the base effect, official data showed on Wednesday.

  

The BJP leader said India was seen as a fragile economy around 2012-13 but while the global economy continues to struggle now due to the Ukraine war and global slowdown, the country is now being seen to be doing strongly under a strong leader in Prime Minister Narendra Modi.

 

Opposition leaders post "fake" tweets to mislead people and they should study before making comments, he said.

 

The Indian economy grew 8.3 per cent in 2021 after a 6.7 per cent contraction in 2020, the year when the pandemic struck the country.

  

In its update to Global Macro Outlook 2022-23, Moody's said India's central bank is likely to remain hawkish this year and maintain a reasonably tight policy stance in 2023 to prevent domestic inflationary pressures from building further.

   

"Our expectation that India's real GDP growth will slow from 8.3 per cent in 2021 to 7.7 per cent in 2022 and to decelerate further to 5.2 per cent in 2023 assumes that rising interest rates, uneven distribution of monsoons, and slowing global growth will dampen economic momentum on a sequential basis," Moody's said.

  

Moody's projections came a day after India released its GDP estimates for June quarter as per which the economy expanded 13.5 per cent in the three-month period.

  

This was higher than 4.1 per cent GDP growth clocked in January-March.

  

Moody's said high-frequency data for the Indian economy shows strong and broad-based underlying momentum in the first four months (Apr-Jul) of fiscal year 2022-23.

  

As per official GDP estimates, the economy expanded 13.5 per cent in April-June 2022-23, higher than 4.10 per cent growth clocked in previous March quarter.

  

Moody's said services and manufacturing sectors have seen robust upswings in the economic activity, according to hard and survey data, such as PMI, capacity utilisation, mobility, tax filing and collection, business earnings and credit indicators.

  

However, inflation remains a challenge with the RBI having to balance growth and inflation, while also containing the impact of imported inflation from the year-to-date depreciation of the Indian rupee against the US dollar of around 7 per cent .

  

India's economic growth before the COVID-19 shock had materially slowed because of the impact of corporate-sector deleveraging on business investment.

 

Although inflation eased slightly to 6.7 per cent in July, it remains above the central bank's target range of 2-6 per cent for the seventh straight month.

  

The RBI forecasts that inflation will remain high into 2023 and has hiked rates three times this year to 5.4 per cent to tame inflation.

 

Moody's said the global economy faces risks from the Russia-Ukraine conflict, and risk of further energy shocks remains high. It said global trade in durable goods and commodity prices are set to soften and a pullback in goods demand is underway.