India's annual GDP growth is expected to be between 7 and 7.2 per cent for the entire year FY 2024-2025, by a report from Deloitte released on Tuesday, a number which concords with RBI that expects real GDP growth of 7.2 per cent for FY25.
Dr. Rumki Majumdar, Deloitte India said that after a high-stakes elections period, India's economy is emerging with resilience as the dust settles. "Its gross domestic product grew 6.7 per cent year over year in the April-to-June quarter.".
While that was the slowest rate in five quarters, India remains one of the world's fastest-growing large economies and Deloitte's analysis predicts continued strength in the year ahead," she said in the 'India economic outlook, October 2024'. The pace of growth is likely to pick up on account of continued expansion in consumer spending, especially in rural India, as inflation starts to ease off and agriculture output improves on the back of favorable monsoon conditions.
According to the report, "India may benefit from higher capital inflows, which will translate into long-term investment and jobs opportunities as multinational companies around the world look to further reduce operational costs." This is one of the government's strengths because its thrust in reenforcing manufacturing and improving employability skills among youth would mean that India has the opportunity for overall growth that no other country can match.
With this country looking to pursue the 2027 to 2028 fiscal targets of reaching a $5 trillion economy while growth in manufacturing and emerging industries and the shift towards clean-energy alternatives are likely to create high-quality formal and green jobs, "this will help many Indian states which aspire to grow rapidly as they already are investing in these areas to tap into the demographics of the large populous country of India.".
According to Dr Majumdar, a Director and economist with Deloitte India, the progress in the labour market is likely to feed into the next rounds of surveys. Rural consumption spending has bounced back, thanks to moderating inflation with food a good example. Moreover, favorable rains (during June to September, rainy days in the nation as a whole were at 109 percent of its long-period average in 2020, and it has been the third highest since 1994) and record-high production as well as stock of kharif crops (rice and paddy planted during the monsoon season from June to August) are indicative of healthy agricultural production this year that would push further rural demand.
This will feed into festive period and subsequent spends, said the report. Capacity utilisation in the manufacturing sector is at an all-time high of 76.4 percent, meaning private investments in the sector should rise. With higher capex, more investments will step in. In its baseline scenario, the bank expects India to grow between 7 per cent and 7.2 per cent in fiscal 2024 to 2025, followed by between 6.5 per cent and 6.8 per cent in fiscal 2025 to 2026.
"That's slightly lower than we estimated previously," said Dr Majumdar. India is expected to grow a little slower the following year, and this has much to do with broader global trends, such as slow growth and a delayed synchronous recovery in the West as we had anticipated early on.
Read also| IMF Projects India's GDP Growth to Slow to 7% in 2024 and 6.5% in 2025
