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Growth Will Be Marginally Less Robust As India Sacrifices External Strength To Tackle Inflation: ICICI Securities


BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Consumer price index inflation eased to 6.7% YoY in July 2022, and is likely to ease further over the next few months as food inflation moderates, and Brent crude prices continue to decline.

We expect CPI inflation to average 6.5% YoY in Q2 FY23 and 5.9% YoY in Q3 FY23 (versus the RBI’s forecasts of 7.1% and 6.4% YoY respectively), and hence expect the policy repo rate to peak at 5.75% this calendar year after a further 35 bps hike at the next Monetary Policy Committee meeting on September 30, 2022.

The imposition of export duties on iron and steel, and petroleum products, in May-2022 was a retrograde step (introducing uncertainty on tax policy, and hurting credibility in export markets), but it is having the desired effect of dampening domestic prices.

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