Economic Survey 2023: Indian economy to grow 6-6.8 per cent next fiscal year

India's economy is projected to slow to 6-6.8 per cent in the fiscal year starting April - still remaining the fastest growing major economy in the world - as extraordinary challenges facing the globe will likely hurt exports, the Economic Survey said.

The projection of India's gross domestic product (GDP) growth is higher than the 6.1 per cent estimate of the International Monetary Fund (IMF) and compares with the survey's estimated 7 per cent expansion in the current fiscal year (April 2022 to March 2023) and 8.7 per cent in the previous year. The survey that details the state of the economy was tabled in Parliament by Finance Minister Nirmala Sitharaman a day before she presents Union Budget 2023-24.

"At least three shocks have hit the global economy since 2020," the report, prepared by Chief Economic Adviser V Anantha Nageswaran, said.

Starting with the pandemic-induced contraction of the global output, the Russian-Ukraine conflict last year led to a worldwide surge in inflation. And then, central banks across economies led by the US Federal Reserve responded with synchronised policy rate hikes to curb inflation.

The rate hike by the US Fed drove capital into the US markets causing the US dollar to appreciate against most currencies. This led to the widening of the Current Account Deficits (CAD) and increased inflationary pressures in net importing economies like India.

"The Indian economy, however, appears to have moved on after its encounter with the pandemic, staging a full recovery in FY22 (April 2021 to March 2022) ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in FY23.

"Yet in the current year, India has also faced the challenge of reining in inflation that the European strife accentuated," the survey said.