How India Is Going To Grow In FY25? Deloitte Report Answers

Deloitte India has projected India’s GDP to grow between 6.5% and 6.8% in the fiscal year 2024-25. This forecast underscores the need for India to adapt to a rapidly changing global landscape while harnessing its domestic strengths to sustain economic growth. In its Economic Outlook report, Deloitte emphasized the importance of India's decoupling from global uncertainties. The country’s ability to tap into its untapped domestic potential will be key to driving sustainable growth. Despite challenges, India is resilient, especially through increased high-value manufacturing exports, particularly in electronics and machinery.

Revised Economic Growth Projections
Deloitte India revised its GDP growth forecast for FY 2024-25 to 6.5-6.8%, a decrease from the 7-7.2% growth projected earlier in October 2024. The revised projection reflects cautious optimism, considering the rising global trade and investment uncertainties.

Domestic and Global Challenges
According to the National Statistics Office's first advance estimates, India's growth rate is expected to be at a four-year low of 6.4% for the current fiscal. Additionally, the Reserve Bank of India ( RBI ) has pegged growth at 6.6% for FY 2024-25. Challenges contributing to this slowdown include election-related uncertainties, weather-related disruptions affecting construction and manufacturing, and a slower-than-expected pace of government capital expenditure.

Global Growth and Trade Uncertainties
The global outlook remains tepid, with potential shifts in trade regulations and stricter monetary policies in India and the US. These factors could hinder the synchronized recovery expected in Western economies, thereby affecting global economic dynamics. As part of its outlook, Deloitte noted the growing importance of retail investors in India’s financial markets. The government is expected to focus on strengthening retail investor participation in the upcoming Union Budget 2025-26. Potential measures could include simplifying investment processes, improving market safety mechanisms to protect household savings, and promoting financial literacy through incentives and campaigns.

Budget Focus on Capital Expenditure and Digitisation
The upcoming Union Budget is likely to prioritize capital expenditure, advance skilling initiatives, and accelerate digitization efforts. These steps aim to enhance economic resilience and mitigate the impacts of ongoing global uncertainties.

Demographic Dividend and Economic Stability
Deloitte also highlighted India’s demographic dividend and the growing middle-class wealth, which have been central to driving consumption demand and bolstering the labor market. These factors are not only fueling economic growth but also enhancing the stability of India’s financial markets.