6.6% growth in India; government programs to improve productivity and employability: Deloitte

Deloitte India projected India’s GDP growth at 6.6% for the current fiscal year on Friday, sending a positive message about the country’s success story.

 

The rise in exports, capital flows, and consumer spending all contributed to this expansion.

It said that increased employability and productivity are anticipated as a result of government expenditures in infrastructure and programs like Ayushman Bharat for health improvements and Future Skills Prime 2021 for skill upgrading.

According to Deloitte, the RBI will need to keep an eye on growing household debt and push banks to utilize data analytics to make better lending choices, even while credit expansion is necessary to boost economic activity.

According to a Deloitte analysis on India’s economic prospects, the middle class’s explosive rise has increased spending power and even generated demand for high-end luxury goods and services.

It updated India’s forecast for GDP growth in the previous fiscal year to 7.6–7.8%. The company estimated in January that growth for the 2023–24 fiscal year would be between 6.9 and 7.2%.

In its quarterly update to its economic forecast, Deloitte said that as markets learn to account in geopolitical concerns in their investment and consumption choices, the country’s GDP growth is anticipated to reach around 6.6% in FY 2024–25 and 6.75 percent the following year.

“We believe this trend will likely become further amplified, driving overall private consumer expenditure growth,” the statement said, “with the expectation that the number of middle-to-high-income segments will be one in two households by 2030-31, up from one in four currently.”

“The global economy is expected to witness a synchronous rebound in 2025 as major election uncertainties get sorted out and the central banks of the West may announce a couple of rate cuts later in 2024,” said Rumki Majumdar, an economist at Deloitte India. India is anticipated to see enhanced capital inflows and a surge in exports.

Robust growth figures in the last two years have aided in the economy’s return to pre-COVID patterns. India has been able to sustain a steady economic pace thanks to investment and significant government expenditure on infrastructure, she said.

Strong economic activity is projected to keep inflation over the Reserve Bank of India’s target level of 4% during the predicted period, according to Majumdar.

Furthermore, Deloitte said that there was a noticeable change in consumption habits, with the demand for luxury and high-end goods and services increasing faster than the need for necessities, even if the rise in consumer spending after the epidemic has been erratic.

Notably, the analysis made clear that a number of remedial actions may be taken in order to sustainably increase family spending in the face of wealth concentration, diminishing savings, and growing debt levels.

Enhancing work prospects in rural and semi-urban regions may increase savings, especially when jobs shift from agriculture—which accounts for 44% of employment but just 18% of GDP—to industries like manufacturing, services, and construction.