According to Deloitte, India's economy may come back to the growth track of 7-7.2 percent during the current fiscal year 2024-25 based on recovery in the rural sector, healthy manufacturing, good financial health of banks, and an exponential rise in exports.
A host of steps proposed in the Union Budget for 2024-25 will lead to improved agricultural productivity, creation of job opportunities for the country's youth, and strong manufacturing, according to Deloitte's update on the economic outlook of India made in August. Supply-side demand will rise, inflationary pressures will be reduced at the same time, and consumer spending will be encouraged, especially in rural areas.
It has reported that the economy of India grew by 8.2 per cent in fiscal 2023-2024, which was unprecedented and beat expectations for the third consecutive year. Against this strong growth backdrop, new spending patterns have been seen to emerge across both rural and urban areas. Spending trends have remained tilted more toward discretionary durable goods such as automobiles and electronic devices, and then services, indicated data from the Household Consumption Expenditure Survey 2022-23.
This shift is also indicative of a larger change in the consumption pattern toward non-food and discretionary items, mirroring changing lifestyles and preferences that seem to last. A new consumer generation is bringing new business opportunities, the report said.
Economist at Deloitte India, Rumki Majumdar, expects the second half of the financial year to be much better after a period of uncertainty during the first half.
"The key contributing factors to this expectation include the continuity in domestic policy reforms, reduced uncertainties in the US post-elections and more synchronised global growth within a low inflation regime. Besides, improved global liquidity conditions as central banks in the West ease their monetary policy stance, will result in better capital flows and higher investments, especially in the private sector," explained Majumdar.
This growth estimate by Deloitte India is closer to the Reserve Bank of India's forecast of 7.2 percent for the Indian economy. The Economic Survey presented by the Finance Ministry had estimated that GDP growth would be between 6.5 to 7 percent after factoring in the possible risks because of global economic uncertainties and rising geopolitical tensions.
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