Giving a positive signal towards India’s growth story, Deloitte India on Friday estimated India’s GDP growth at 6.6 per cent in the current fiscal.

This growth was helped by consumption expenditure, exports rebound and capital flows.

It said that the government investments in infrastructure and initiatives such as Future Skills Prime 2021 for skill enhancement and Ayushman Bharat for health improvements are expected to enhance employability and productivity.

Despite the necessity for credit growth to stimulate economic activity, the RBI will have to monitor rising household debt and encourage banks to leverage data analytics for smarter lending decisions, Deloitte said.

In a report on India’s economic outlook report, Deloitte said the rapid growth of the middle-income class has led to rising purchasing power and even created demand for premium luxury products and services.

It revised India’s economic growth prediction for last fiscal to a range of 7.6 to 7.8 per cent. In January, the firm had projected growth for 2023-24 fiscal in the range of 6.9-7.2 per cent .

The country’s GDP growth is estimated to reach around 6.6 per cent in FY 2024-25 and 6.75 per cent in the year after, as markets learn to factor in geopolitical uncertainties in their investment and consumption decisions, Deloitte said in its quarterly update to its economic outlook.

It said that ”with the expectation that the number of middle-to-high-income segments will be one in two households by 2030-31, up from one in four currently, we believe this trend will likely become further amplified, driving overall private consumer expenditure growth”.

Deloitte India Economist Rumki Majumdar said, “the global economy is expected to witness a synchronous rebound in 2025 as major election uncertainties get sorted out and the central banks of the West may announce a couple of rate cuts later in 2024. India will likely see improved capital flows and a rebound in exports.”

Strong growth numbers over the past two years have helped the economy to catch up with the pre-COVID trends. Investment, backed by strong government spending on infrastructure, has helped India maintain a steady recovery momentum, she added.

Inflation is expected to remain above the Reserve Bank of India’s target level of 4 per cent over the forecast period due to strong economic activity, Majumdar said.

Further, Deloitte said even as growth in consumer spending post-pandemic has been fluctuating, there was a visible shift in consumption patterns, with demand for luxury and high-end products and services growing faster than demand for basic goods.

Notably, the report highlighted that to sustainably boost household spending amidst wealth concentration, declining savings, and rising debt levels, several corrective measures can be implemented.

Increasing employment opportunities in rural and semi-urban areas could elevate savings, particularly as employment transitions from agriculture, which represents 44 per cent of employment but only about 18 per cent of GDP, to sectors like manufacturing, services, and construction.