India ranks among the fastest growing major economies globally.
Indian economy may grow between 7-7.2% in current fiscal on strong government spending, higher investment in manufacturing
India’s economy may grow between 7-7.2 percent in the current fiscal on strong government spending and higher manufacturing investment, but subdued global growth will weigh on the outlook for the next fiscal, Deloitte India said on Tuesday.
In its October 2024 India Economic Outlook, Deloitte said a booming manufacturing sector, stable oil prices and potential post-election US monetary easing could increase capital inflows into India, lower manufacturing costs and improve long-term investments and job opportunities.
The economy grew 6.7% year-on-year in the April-June quarter of the current fiscal ending March 2025. Although this was the slowest growth in five quarters, India ranks among the fastest growing major economies worldwide.
Deloitte India maintains its forecast for annual GDP growth between 7% and 7.2% in the financial year 2024-25 and between 6.5% and 6.8% next year, it said in a statement.
India’s central bank RBI earlier this month forecast the Indian economy to expand by 7.2% in the current fiscal, supported by strong domestic activity.
“Domestic factors such as slowing inflation, especially in food, more rainfall and record Kharif production, stronger government spending in the second half of the year and rising investment in manufacturing will help India’s growth this year.”
“Higher capital flows following the US Federal Reserve’s interest rate cut could translate into long-term investment and job opportunities as multinationals around the world look to further reduce operating costs,” said Rumki Majumdar, an economist at Deloitte India.
“However, a subdued global growth outlook and a delayed synchronized recovery in Western economies are likely to weigh on India’s exports and prospects for the next fiscal year,” it added.
Deloitte said job creation in the economy was key to ensuring stable household incomes and the latest employment figures pointed to some green shoots.
“India will need more formal and quality jobs to ensure better income distribution. The emphasis on manufacturing and the growth of emerging industries, such as semiconductors and electronics, which require advanced education and specialized skills, will create more high-quality jobs,” it said.
In addition, India’s pursuit of clean energy alternatives will create green jobs in various sectors including energy, agriculture, tourism and transport. Additionally, India’s biggest strength “its young, ambitious population – positions it to reap rapid and significant returns from the government’s recent efforts to develop skills,” Deloitte added.
It said the MGNREGA scheme provides temporary employment jobs to people who have limited or no alternative options for stable income. For the first time since the pandemic, the scheme’s 12-month moving average ‘jobs wanted’ fell below pre-pandemic levels in August 2024.
The steady decline likely also points to the possibility that people are finding better-paying job opportunities elsewhere, it said.
According to a survey by Deloitte, employment shares in the manufacturing and service sectors also improved moderately. The implementation of schemes such as production-related incentives contributed to the recovery of the share of manufacturing jobs (11.4 percent) after the pandemic (10.9 percent).
The services sector’s share of employment has seen a large jump over the past one year, from 28.9 percent in 2022-23 to 29.7 percent in 2023-24. The largest increase in employment was in the “other services” category , which includes business and professional services. In addition, the share of wage workers, which had declined during the pandemic, is now rising again.
(This story was not edited by News18 staff and was published by a syndicated news agency feed – PTI)
