NEW DELHI — India's economy is expected to clock a 7 to 7.2 per cent growth rate in 2024-25 supported by a rebounding rural economy, strong manufacturing growth, robust bank balance sheets, and increased exports, according to financial advisory firm Deloitte.
The August update of Deloitte's India Economic Outlook said several initiatives in the Union Budget 2024-25 toward improving agriculture productivity, creating jobs for the youth, and manufacturing would help improve supply-side demand, curb inflation, and prop up consumer spending, especially in rural areas.
According to the report, optimism prevails as India records 8.2 per cent growth in the FY 2023-2024, exceeding all expectations for the third consecutive year. Amidst the robust growth, new spending patterns are emerging in both rural and urban India. There is a visible shift towards spending on discretionary durable goods (including automobiles and electric and electronic goods) as well as services as evidenced by the data released by the Household Consumption Expenditure Survey 2022-23, the report added.
This points to a broad-based shift in the composition of consumption toward more non-food and discretionary items, reflecting changing lifestyles and preferences that are here to stay. The rise of a new generation of consumers is creating new business opportunities, the report states.
Deloitte India Economist Rumki Majumdar said India will 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. 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.
Deloitte India's growth projection is in line with the RBI’s growth forecast of 7.2 per cent for the Indian economy. The Finance Ministry's Economic Survey estimated GDP expansion between 6.5-7 per cent keeping in mind the downside risk due to global economic uncertainties created by rising geopolitical tensions.