Indian economy to grow 6.5-6.8% in 2024-25 fiscal, projects Deloitte
Deloitte India Revises GDP Growth Forecast Amid Economic Challenges
In New Delhi, Deloitte India has updated its Economic Outlook, adjusting the GDP growth forecast for 2024-25 to 6.5-6.8%, with a projection of 6.7-7.3% for the following year. This change reflects the need for cautious optimism due to global trade and investment uncertainties. The GDP growth for Q2 2024-25 was 5.4%, below market expectations. Consequently, the RBI revised its growth forecast to 6.6%, while the NSO estimated 6.4% growth for the current fiscal year.
Rumki Majumdar, an economist at Deloitte India, highlighted that election uncertainties and weather-related disruptions affected construction and manufacturing, leading to weaker capital formation. Government capital expenditure reached only 37.3% of annual targets in the first half, down from 49% last year. Global growth outlooks and potential trade regulation shifts may hinder recovery in Western economies.
Deloitte suggests India should adapt to global changes and leverage domestic strengths for sustainable growth. Rural consumption remains strong, supported by agriculture and rising rural spending power. The services sector, including finance and real estate, continues to grow, boosting urban income and exports.
Despite challenges, India is advancing in global value chains, with increased high-value manufacturing exports. The capital markets showed resilience, with Domestic Institutional Investors mitigating the impact of Foreign Institutional Investors' withdrawals due to geopolitical uncertainties.
Majumdar noted that the sensitivity of Indian capital markets to FII changes has decreased since 2020. The Indian economy grew by 5.4% in the July-September quarter of 2024-25, below the RBI's 7% forecast. The GDP data and inflation pose a challenge for policymakers aiming to reduce retail inflation to 4%. The RBI has maintained a 6.5% repo rate to control inflation.
Doubts Revealed
Deloitte India
Deloitte India is a part of Deloitte, a big company that provides services like consulting and financial advice to businesses. They help companies make important decisions about money and growth.
GDP Growth Forecast
GDP stands for Gross Domestic Product, which is the total value of all goods and services produced in a country. A GDP growth forecast is an estimate of how much this value will increase in the future.
Global Trade Uncertainties
Global trade uncertainties refer to unpredictable changes in how countries buy and sell goods with each other. These changes can affect how much money countries make from trade.
RBI
RBI stands for the Reserve Bank of India, which is the central bank of the country. It manages the money supply and interest rates to keep the economy stable.
Repo Rate
The repo rate is the interest rate at which the RBI lends money to banks. By changing this rate, the RBI can control inflation and influence how much money is available in the economy.
Retail Inflation
Retail inflation is the rate at which the prices of goods and services bought by consumers increase over time. It affects how much things cost in stores.
Economist Rumki Majumdar
Rumki Majumdar is an economist, which means she studies how money and resources are used in the economy. She provides insights on economic trends and challenges.
Election Uncertainties
Election uncertainties refer to the unpredictability of election outcomes and their impact on the economy. Changes in government policies can affect economic growth.
Weather Disruptions
Weather disruptions are unexpected changes in weather, like heavy rains or droughts, that can affect agriculture and other industries, impacting the economy.
Global Value Chains
Global value chains are the series of steps involved in producing a product, where different parts are made in different countries. India is becoming more involved in these processes, which can boost its economy.
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