Industry body FICCI (Federation of Indian Chambers of Commerce & Industry) on Thursday downgraded India's 2022-23 GDP growth forecast to 7% from 7.4% estimated in its previous survey round in April 2022.

The downgrade, according to FICCI latest Economic Outlook Survey, is owing to continuing geopolitical uncertainty and its repercussions on India's economy.

The median growth forecast for agriculture and allied activities has been put at 3% for FY23, while industry and services sectors are anticipated to grow by 6.2% and 7.8% respectively, the survey notes.

Based on the responses of the participants, the median forecast for exports has been put at $460 billion and for imports at $727.5 billion in the financial year 2022-23, the survey says.

FICCI survey projects the RBI's policy repo rate at 5.65% by the end of the fiscal year 2022-23, with a minimum and maximum range of 5.50% and 6.25%, respectively.

The survey pegs CPI-based inflation at 6.7% for 2022-23, with a minimum and maximum range of 5.4% and 7%, respectively.

Inflation in India is unlikely to moderate in the near-term, the survey shows. "The supply-side disruptions brought on first by the Covid-19 pandemic and further worsened by the Russia-Ukraine conflict, as well as the recent strict lockdowns in China have been the major reasons for the spike in inflation levels in the country," it says.

Since January 2022, the CPI-based retail inflation rate has exceeded the RBI's upper target range for five consecutive months.

Although economists opined that high price of commodities with seasonal elements, such as vegetables and fruits, are expected to reverse course as soon as the new harvest enters the market.

Inflation is anticipated to remain above the RBI's tolerance band till the third quarter of FY23 and may come within the tolerance level only after the fourth quarter of the current fiscal, the survey notes, adding that high inflation is expected to have an unfavourable impact on consumer demand in the medium-term.

Inflation levels are expected to slow down starting September 2022 and fall back into the 4% range only by June 2023, the survey shows.

There was a unanimous view among the survey participants that although the Indian economy is expected to face a slowdown in the near-to-medium term, it will still grow consistently to emerge as the fastest growing economy in the world.

Economists who participated in the survey opined that geopolitical tensions, a diminishing global growth outlook, supply-side disruptions, elevated commodity prices, and monetary tightening will remain as key downside risks to India's economic growth.

Slowdown in major economies, particularly in India's major trade partners, is anticipated to impact exports from the country - which had cushioned GDP growth in the face of a lack of effective domestic demand, FICCI says.

On the steep fall in the Indian rupee's value against the US dollar, FICCI survey says higher interest rates in advanced nations are leading to consistent foreign fund outflows from the domestic financial markets which is causing a drastic fall in the value of the Indian rupee vis-à-vis the US dollar.

The survey participants expect the USD/INR exchange rate to be around 78 by the end of the current financial year. The present round of FICCI's Economic Outlook Survey was conducted in the month of June 2022.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.