New Delhi: Deloitte India stated on Tuesday that the Indian economy may see a growth of 7-7.2 per cent in the current fiscal year due to robust government spending and increased investments in manufacturing. However, the outlook for the following fiscal year may be affected by moderate global growth. Deloitte's report 'India Economy Outlook for October 2024' stated that India's capital inflows could increase, production costs could decrease, and long-term investments and job opportunities could improve due to the flourishing manufacturing sector, steady oil prices, and possible US monetary easing after the elections.
Deloitte Forecasts 7 pc Annual Growth Amid Job Creation, Sectoral Shifts
The economy experienced a year-over-year growth of 6.7 per cent in the April-to-June quarter of the fiscal year ending March 2025. While it represents the lowest increase in five quarters, India is still one of the top-growing major economies worldwide. Deloitte India maintains its forecast for annual GDP growth to be in the range of 7 per cent to 7.2 per cent in FY 2024-2025 and between 6.5 per c
ent to 6.8 per cent the next year, as stated in a press release.
Earlier this month, the Reserve Bank of India (RBI) predicted that the Indian economy will grow by 7.2 per cent in the current fiscal year due to strong domestic activity. Factors within India like decreasing inflation rates, particularly in food, improved rainfall, a successful Kharif season, higher government spending in the latter part of the year, and increased investment in manufacturing will contribute to the country's growth in the current year.
Deloitte India Economist Rumki Majumdar mentioned that increased capital inflows following the US Fed's rate cuts could result in long-term investment and job prospects as global multinational companies aim to lower operational expenses. The econiomist added that India's exports and outlook for the upcoming fiscal year are likely to be affected by a cautious global growth forecast and a postponed simultaneous recovery in western economies.
The company also mentioned that creating jobs is crucial for maintaining a stable household income, and the most recent employment information indicates some positive signs of growth. India requires an increase in the number of formal and high-quality jobs to improve income distribution. It was stated that the focus on production and the growth of up-and-coming sectors like semiconductors and electronics will lead to the generation of higher-quality jobs, demanding advanced education and specialized skills.
Transition to cleaner energy sources to boost job opportunities
Moreover, India's effort to transition to cleaner energy sources will create employment opportunities in different industries such as energy, agriculture, tourism, and transportation. Deloitte mentioned that India's young and ambitious population is its biggest advantage, placing the country in a good position to benefit greatly from the government's recent focus on skill development.
About MGNREGA program
It has been mentioned that the MGNREGA program offers short-term employment for individuals with few or no other reliable income options. In August 2024, the scheme's 12-month moving average 'employment demanded' number dropped below pre-pandemic levels for the first time since the pandemic. It was mentioned that a consistent decrease may indicate that people are possibly discovering higher-paying job options in other places.
The company's research shows that there has been a slight improvement in employment shares within the manufacturing and services sectors. Implementing programs such as production-linked incentives has helped increase job shares in manufacturing by 11.4 per cent post-pandemic, compared to 10.9 per cent before. In the past year, there has been a significant increase in the percentage of employment in the services sector, rising from 28.9 pc in 2022-23 to 29.7 pc in 2023-24. The largest increase in employment has been seen in the 'other services' sector, which encompasses business and professional services.
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Moreover, there has been an increase in the proportion of salaried workers after experiencing a decline during the pandemic.
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