India Ratings today revised down its economic growth forecast for financial year 2018-19 by two notches to 7.2 per cent citing rising inflationary risks.
The ratings agency has also revised upwards its inflation forecast despite a likely normal rainfall this year.
"The key reasons for the downward revision (GDP forecast) is the headwinds emanating from the elevated global crude prices and government decision to fix the minimum support prices (MSPs) of all kharif crops at 1.5 times of the production cost," the agency said in a note.
The other headwinds are rising trade protectionism, a falling rupee and no visible signs of the abatement of the non-performing assets of banks, it added.
The agency has also revised upwards its inflation forecast saying "despite a likely normal rainfall in 2018, we now expect average retail and wholesale inflation in FY19 to come in at 4.6 per cent and 4.1 per cent, respectively as against 4.3 per cent and 3.4 per cent forecast earlier."
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