Deloitte expects Indian economy to grow at 7.1-7.6% in FY23




Deloitte expects India to grow at 7.1-7.6 per cent in fiscal 2022-23 (FY23) and by 6-6.7 per cent in FY24. This will ensure India reigns as the fastest-growing economy over the next few years, driving world growth even as several major economies brace themselves for a slowdown or possibly a recession. Deloitte believes risks are not strong enough to deny India an economic rebound given the domestic demand potential.

India is primarily a domestic demand–driven economy with consumption and investments contributing to 70 per cent of the economic activity, says Deloitte.

Deloitte expects India to grow at 7.1-7.6 per cent in FY23 and by 6-6.7 per cent in FY24. This will ensure India reigns as the fastest-growing economy over the next few years, driving world growth even as several major economies brace themselves for a slowdown or a recession. Deloitte believes risks are not strong enough to deny India an economic rebound.

According to the Reserve Bank of India (RBI) analysis of 10,000 listed companies, businesses have seen a steady net profit-to-sales growth over the past year and are sitting on piles of cash.

Although investments are growing sporadically, partly because of supply chain disruptions and global uncertainties, industry and service activities remain robust, as indicated by the recent purchasing managers’ index (PMI) for the country, says Deloitte in its India Economic Outlook.

Despite inflation hitting hard Indian consumers, with low-income households getting disproportionately affected, consumer confidence is improving with the easing of mobility restrictions. The government’s capital spending share is going up even as it is cutting down revenue expenses.

India’s gross tax collection has beaten all expectations. The total tax collection reached ₹27.07 lakh crore ($356.82 billion) in FY22, surpassing the government’s revised target by a substantial margin. Improved economic activity and better compliance efforts in taxation have aided in better revenues.

Higher capital spending on infrastructure and asset-building projects is likely to boost growth multipliers in the medium term, Deloitte notes.

Exports, in terms of their contribution to the gross domestic product (GDP), performed exceptionally well during the pandemic and bolstered recovery when all other growth engines were losing steam. Going forward, the contribution of merchandise exports may waver as several of India’s trade partners witness economic slowdown.

India’s manufacturing sector growth looks encouraging as several multinational companies will look for resilience and cost-effectiveness in light of the China Plus One strategy, it says.

Economic fundamentals have deteriorated fast in the past two quarters in India, thanks to the uncertainties in and risks to the global business environment, Deloitte says. As a result, the company has revised down its baseline projections compared to its outlook in March by over a percentage point.

According to its baseline scenario, FY23 will likely witness the strongest rebound. Despite global risks, consumer and investment demand picks up. The buoyancy impact of the government spending coincides with the economic recovery, Deloitte observes.

Uncertainties in the global business ecosystem will send crippling headwinds toward India. Inflation and supply chain disruptions will remain entrenched for some time.

However, domestic demand and the desire of global businesses to look for more resilient and cost-effective investment and export destinations, among other factors, will help India ride this tide of headwinds. The optimism about India’s economic recovery, although slightly bruised, remains intact, Deloitte adds.

Fibre2Fashion News Desk (DS)





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