Dun & Bradstreet’s monthly Economy Observer report provides in-depth analysis on key macroeconomic developments in India and a monthly forecast of key economic indicators

Mumbai, July 27th, 2022

Key economic forecast:

Real Economy: Dun & Bradstreet expects industrial production during June 2022 to have grown at a higher rate year-on-year, partly due to the low index value last year. Investment activity supporting industrial production is expected to have been led by improving capacity utilisation, the government’s capex push, and strengthening bank credit. Nonetheless, industrial activity is likely to moderate towards the second half of FY23 as risk emanates from high input and borrowing costs, geopolitical uncertainty, along with a slowdown in global economic activity. Dun & Bradstreet expects the Index of Industrial Production (IIP) to have grown by 16.0% - 17.0% during June 2022.

Price Scenario: Headline in?ation is expected to remain above the Reserve Bank of India’s (RBIs) upper threshold limit of 6.0% for most of the year as global supply chain pressures and their impact on commodity prices is yet to ease substantially. A depreciating rupee and the recent increase in domestic taxes will also contribute to inflationary pressures. The Central Bank will be under pressure to further raise interest rates, owing to depreciation pressures on rupee and elevated inflation. Dun & Bradstreet expects Consumer Price Inflation (CPI) to be in the range of 6.25% - 6.30% and Wholesale Price Inflation (WPI) to be around 15.2% - 15.4% in July 2022.

Money & Finance: With more policy rate hikes expected, and outflows in the debt market, bond yields are expected to remain elevated. Dun & Bradstreet therefore expects the 15-91-day Treasury Bills yield to average at around 5.2% - 5.25% and 10-year G-Sec yield at around 7.4% - 7.5% during July 2022.

External Sector: Depreciation pressures on the rupee, along with other emerging market currencies, is expected to increase as the US Federal Reserve is likely to opt for another 75-basis point hike by end of July 2022, leading to further dollar strengthening and foreign investment (FII) outflows. FII outflows along with the intervention by the RBI is causing depletion of forex reserves adding pressure on rupee. Forex reserves fell to a 15-month low in June 2022. In addition, a widening of the trade deficit to all time high coupled with downside risks to growth will continue to exert downward pressures on rupee. Dun & Bradstreet expects the rupee to be at 79.8 – 80.0 per US$ band during July 2022.

Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet said, “A continued rally in input prices, rising borrowing costs, along with volatility in the financial markets, are expected to restrain the pace of business activity in India during the second half of FY23. Additionally, taxes imposed on various products and services are likely to hit corporate earnings and impact consumers. On the other hand, household consumption will be constrained by inflationary pressures. Growth is therefore expected to be moderate; however, the extent of slowdown will depend on the strengthening of global headwinds i.e. aggressive global monetary tightening, protracted war in Europe, and a rise in the risk of sovereign default in countries, especially in India’s neighbouring countries.


Dun & Bradstreet’s Economy Observer Forecast



Latest Period

Previous period

IIP Growth

16% - 17% Jun-22

19.64% May-22

7.14% Apr-22

Inflation WPI

15.2% - 15.4% Jul-22

15.18% Jun-22

15.88% May-22

CPI (Combined)

6.25% - 6.30% Jul-22

7.01% Jun-22

7.04% May-22

Exchange Rate (INR/US$)

79.8 - 80.0 Jul-22

78.09 Jun-22

77.30 May-22

15-91 day's T-Bills

5.2% - 5.25% Jul-22

5.03% Jun-22

4.70% May-22

10 year G-Sec yield

7.45% - 7.5% Jul-22

7.53% Jun-22

7.39% May-22

Bank Credit*

12.2% - 12.3% Jul-22

12.06% Jun-22

11.02% May-22


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