Deloitte India, in a report on Monday, said India’s economy is expected to grow at 7-7.2% in the current fiscal year driven by robust economic fundamentals and continuity in domestic policy reforms.
Several initiatives in the Union Budget 2024 toward improving agriculture productivity, creating jobs for the youth, and in manufacturing and addressing the challenge of access to finance for micro, small, and medium enterprises (MSMEs), would help improve supply-side demand, curb inflation, and prop up consumer spending, especially in rural areas, the August update of Deloitte’s India Economic Outlook said.
Observing that strong economic fundamentals would drive GDP growth between 7% and 7.2% in FY25, the Economic Outlook report said effectively addressing the urban-rural consumer spending gaps, inflation, and employment concerns can significantly enhance the affordability of aspirational rural consumers.
Deloitte India Economist Rumki Majumdar said India would witness robust growth in the second half after a period of uncertainty in the first six months of the year. “Key contributing factors include the continuity in domestic policy reforms, reduced uncertainties in the US post-elections, and more synchronous global growth within a low inflation regime,” she added.
“Additionally, improved global liquidity conditions, as central banks in the West ease their monetary policy stance, will enhance capital flows and drive higher investments, particularly in the private sector,” Majumdar said.
The report said the much-desirable policy pivot was evident in the Union Budget presented last month. Reducing the urban and rural spending gap in the coming years will ensure sustained consumer demand from a larger consumer base.
The report further said despite strong growth, private consumption spending has remained modest over the past five years. The pandemic, high global and domestic inflation, consequent tightening of financial conditions, and the effects of poor agriculture output on rural demand seem to have capped private consumption growth in India.
Deloitte India’s growth projection is at par with that of RBI, which projected FY’25 growth at 7.2%. It is higher than Finance Ministry’s Economic Survey which estimated GDP expansion between 6.5-7%.