The moderation is expected as it sees the benefit of the low interest rate regime to end by the end of FY23 and the central bank hiking policy rates by 50 bps in the second half of the next fiscal.

The Reserve Bank of India also forecast 9.5 per cent GDP growth this fiscal while the average projection ranges from 8.5 to 10 per cent. The government projection is around 10 per cent.

In its September review, UBS said on a seasonally adjusted sequential basis, the real gross domestic product (GDP) declined by 12.4 per cent in the June quarter against minus 26 per cent in the same period last year. The GDP grew 20.1 per cent in the June quarter of FY22.

According to Tanvee Gupta Jain, chief economist at UBS Securities India, the economy is bouncing back on progressive reopening and the recovery from the second wave has been more pronounced than what the company anticipated.

Without giving an exact number, she told reporters in a conference call that the economy will grow by 9-10 per cent in the third quarter and 6-6.5 per cent in the fourth this fiscal, leading to higher overall full-year growth, according to Indian media reports.

Beyond FY22, Gupta-Jain believes capital expenditure, especially infrastructure spending, manufacturing and exports will be the next key growth drivers.

On inflation, she expects consumer price inflation to decelerate to 4.8 per cent in FY23 from 5.4 per cent in FY22, assuming the RBI gradually starts unwinding its ultra-easy policy as the economic recovery gains momentum. In a base case scenario, she expects a policy rate hike of 50 bps in H2 FY23.

On the fiscal front, she expects the government to remain committed to fiscal consolidation and narrow the deficit to 8.8 per cent in FY23 from 10.1 per cent in FY22.

Fibre2Fashion News Desk (DS)