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Deloitte projects Indian economy to grow 7-7.2% in FY25

2024-10-25

Deloitte India retained its growth forecast for India at 7-7.2% for the current fiscal year 2024-25, noting that the economy had expanded by 8.2% in FY 2024. The company attributed this growth to domestic factors such as moderating inflation, particularly in food items, improved rainfall and record Kharif production, increased government spending in the latter half of the year, and rising manufacturing investments, all of which were expected to contribute positively to the country's economic outlook.

Rumki Majumdar, an Economist at Deloitte India, stated that higher capital inflows following the US Federal Reserve’s interest rate cuts could lead to long-term investments and job creation, as multinational companies sought to reduce operational costs globally. She cautioned, however, that India’s exports and economic outlook for the upcoming fiscal year might be affected by a tempered global growth outlook and a delayed recovery across Western economies. Deloitte projected growth for FY 2026 to be within the range of 6.5-6.8%.

The agency underscored the importance of job creation for ensuring stable household incomes, referencing recent employment data that indicated promising signs. Deloitte’s report observed that the MGNREGA scheme, which provides temporary employment to individuals with limited or no other stable income options, saw a decline in ‘employment demanded’ on a 12-month moving average basis, reaching pre-pandemic levels for the first time in August 2024. This decline may indicate that individuals are securing better-paying job opportunities.

Deloitte noted that India would require a greater number of formal, quality jobs to ensure equitable income distribution. The growth in manufacturing and the expansion of emerging industries, such as semiconductors and electronics requiring advanced skills, are anticipated to create high-quality employment opportunities. According to Deloitte’s findings, employment shares within the manufacturing and services sectors have shown modest improvement, with the highest job growth occurring in the “other services” category, which encompasses business and professional services. The share of salaried employees, which had declined during the pandemic, is also on the rise.

The report further highlighted that India's drive towards clean-energy alternatives is poised to generate green jobs across sectors including energy, agriculture, tourism, and transport. Additionally, Deloitte emphasised that India's young and ambitious population offers the country significant potential to reap benefits from the government’s recent initiatives in skill development.