India’s economic growth is projected to slow in FY2024-25, with Deloitte India forecasting a GDP expansion of 6.5-6.8%. This marks a revision from the earlier estimate of 7-7.2% as India contends with both domestic challenges and the broader global economic landscape. The revised forecast comes as the economy faces uncertainties in global trade, investment, and domestic sectors, calling for adaptation and leveraging domestic strengths to sustain growth.
Slower Growth Amid Domestic and Global Challenges
Deloitte’s revised economic outlook reflects weaker-than-expected performance in India’s construction and manufacturing sectors, particularly in the first half of FY2024-25. Election-related uncertainties in the first quarter, combined with weather-related disruptions, have contributed to subdued growth. Additionally, global trade uncertainties and tighter monetary policies in both India and the US have impacted the recovery trajectory of Western economies, further adding pressure on India’s growth prospects.
According to the National Statistics Office (NSO), India’s GDP is expected to slow to 6.4% in FY2024-25, the lowest growth rate in the last four years. Similarly, the Reserve Bank of India (RBI) forecasts a growth rate of 6.6% for the same period.
Advancing in Global Value Chains
Despite these challenges, India has been steadily advancing in global value chains, particularly in high-value manufacturing exports. Key sectors such as electronics, machinery, and equipment are seeing increased demand, which is driving the country’s position in the global economy. Deloitte’s report highlighted this resilience, noting India’s growing share in high-value manufacturing exports as a positive sign for long-term growth.
However, capital expenditure (capex) by the government has been lagging, reaching just 37.3% of its annual target in the first half of FY2024-25, down from 49% last year. This slowdown in public sector investment could hinder the momentum needed to sustain growth in the latter half of the fiscal year.
Focus on Decoupling from Global Uncertainties
Deloitte emphasized the importance of decoupling from global uncertainties and harnessing India’s untapped domestic potential. The report stressed that India must adapt to the changing global landscape and diversify its growth drivers, with a focus on infrastructure, digitisation, and financial resilience.
Looking ahead to the Union Budget 2025-26, Deloitte expects the government to prioritize measures that boost retail investor participation, protect household savings, and promote financial literacy. These steps could support a more robust and diversified economic base that is less dependent on volatile global factors.
Long-term Resilience Driven by Demographic and Financial Strengths
India’s demographic dividend, growing middle-class wealth, and strengthening financial markets provide a solid foundation for economic stability. These factors not only fuel domestic consumption but also contribute to the resilience of India’s financial markets, enhancing the country’s ability to weather global economic challenges.
Deloitte noted that India’s ability to sustain growth, even in the face of external volatility, will depend on how effectively the government implements structural reforms and accelerates initiatives in digitisation, capital expenditure, and skilling. These areas are expected to be key focus points in the upcoming budget.
Outlook for India’s Growth
In conclusion, while India’s GDP growth for FY2024-25 is expected to fall short of previous projections, the country’s economic fundamentals remain strong. The government’s focus on infrastructure, digitisation, and financial inclusion will play a critical role in enhancing economic resilience. Despite facing short-term challenges, India is well-positioned for long-term growth, with a diverse economy, expanding manufacturing sector, and evolving domestic policies driving its future trajectory.
