News Brief

Indian Economy Likely To Grow At 6.5-6.8 Per Cent In FY25, 6.7-7.3 Per Cent In FY26: Deloitte

Kuldeep NegiDec 29, 2024, 02:32 PM | Updated 02:55 PM IST
GDP (Representative image).

GDP (Representative image).


Indian economy is expected to grow at 6.5-6.8 per cent in the financial year 2024-25, and slightly higher between 6.7-7.3 per cent in FY26, primarily driven by strong domestic consumption, Deloitte said on Sunday (29 December).

Deloitte India Economist Rumki Majumdar stated that growth in the first half of FY2025 was slower than expected due to uncertainties surrounding elections, disruptions caused by heavy rainfall, and geopolitical events, which collectively weighed on domestic demand and exports.

Despite these challenges, India has demonstrated resilience in specific areas, including robust consumption trends, growth in services, an increasing share of high-value manufacturing exports, and the capital market.

The government's continued focus on infrastructure development, digitisation, and attracting FDI will be the additional growth booster, improving overall economic efficiency.

"We remain cautiously optimistic and expect the growth rate to remain between 6.5 and 6.8 per cent this fiscal year and slightly higher between 6.7 and 7.3 per cent in FY2026," Majumdar was quoted as saying by news agency PTI.

The Reserve Bank of India (RBI) recently revised its growth forecast for the current fiscal year to 6.6 per cent, down from the 7.2 per cent it had projected in June.

According to Deloitte, India's position in global value chains is strengthening, as evidenced by the growth in manufacturing exports in high-value segments such as electronics, semiconductors, and chemicals.

Meanwhile, capital markets have shown stability despite significant FII outflows over the past two and a half months, due to increased participation from retail and domestic institutional investors.


"A myriad of factors, such as improved agricultural incomes, targeted subsidies, social welfare programmes, government employment initiatives, advancements in digitisation, and stronger services sector growth will help broad-base consumption spending," Majumdar said.

India will have to ride out the rough patch, as several global headwinds pose challenges.

Geopolitical tensions, trade disputes, supply chain disruptions, and the escalating impact of climate change could weigh heavily on growth and long-term economic stability, she added.

She also noted that expected policy shifts and trade restrictions in the US might reduce export demand and capital inflows.

Additionally, fewer rate cuts by Western central banks and tighter global liquidity could constrain the RBI's monetary policy options.

Majumdar said over the next few years, India's growth will hinge on its ability to economically decouple from global uncertainties.

"The Indian economy has the opportunity to turn the lime into lemonade by focusing on three factors. The first would be to build on its own strengths. Harnessing the demographic dividend and growing middle-class wealth through investments in workforce development and employability will drive consumption, reduce skill gaps, boost the labour market, and strengthen capital markets," she said.

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