Deloitte revises India's FY24 growth forecast to 7.6%-7.8%

Deloitte’s upward revision comes after several other entities including the IMF, World Bank, Asian Development Bank and S&P Global raised their forecasts for India’s GDP growth in FY24.

Consultancy major Deloitte raised its India GDP growth forecast for FY24 to 7.6-7.8% on Friday from its earlier forecast of 6.9-7.2%, anticipating higher consumption expenditure and economic activity. The company said it expects India’s GDP growth to be around 6.6% in FY25 and 6.75% in FY26.

Deloitte’s upward revision comes after several other entities including the IMF, World Bank, Asian Development Bank and S&P Global raised their forecasts for India’s GDP growth in FY24.

“The global economy is expected to witness a synchronous rebound in 2025 as major election uncertainties get sorted out and central banks in the West may announce a couple of rate cuts later in 2024. India will likely see improved capital flows and a rebound in exports,” said Rumki Majumdar, economist at Deloitte India.

“Strong growth numbers over the past two years have helped the economy catch up with pre-covid trends. Investment, backed by strong government spending on infrastructure, has helped India maintain a steady recovery momentum,” Majumdar added.

Upwardly mobile

As things stand, India remains the world’s fastest-growing major economy. The economy surged ahead in the December quarter, clocking 8.4% growth and belying fears of a slowdown as manufacturing, electricity and construction continued to fire on all cylinders.

High growth numbers in the quarter caused India’s National Statistical Office to raise its GDP growth estimate for FY24 from 7.3% in its first forecast to 7.6% in its second. The RBI’s economic-growth estimate for FY24 is 7%, while the International Monetary Fund pegs it at 6.7%. Ratings agency Moody’s has revised its estimate from 6.6% to 8%, citing strong government expenditure and domestic consumption.

Last month Fitch Ratings raised India’s growth forecast for FY25 from 6.5% to 7%, saying investment would be a significant driver of growth.

Challenges remain

Majumdar said that despite reporting higher-than-expected growth, the Indian economy faces challenges around inflation and geopolitical uncertainties that are translating to higher food and fuel prices.

“The prediction of an above-normal monsoon will likely provide some respite by positively impacting agriculture output and easing pressure on food prices,” she said. “Inflation is expected to remain above the RBI’s target level of 4% over the forecast period due to strong economic activity,” she added.