The Russia-Ukraine crisis has pulled up oil prices, in turn affecting the global economy. Morgan Stanley, in a recent report, cut India's GDP forecast for FY23 by 50 basis points to 7.9%, and raised retail inflation projection to 6%, and expects current account deficit to widen to 3% of GDP.
"Even as we expect the cyclical recovery trend to continue, we expect it to be softer than we previously projected. We believe that the ongoing geopolitical tensions exacerbate external risks and impart a stagflationary impulse to the economy," it said.
The retail inflation rate in India - measured by the Consumer Price Index (CPI) - came in at 6.07% in February, breaching the upper limit of the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) for the second time. In January, the reading had risen to 6.01%.