Deloitte India announced on Friday that India is expected to grow at a moderate pace between 6% and 6.5% in the fiscal year 2023-24, even as the global economy continues to struggle. Deloitte India’s economist, Rumki Majumdar, stated that growth in the next year is likely to pick up as investment kickstarts the virtuous circle of job creation, income, productivity, demand, and exports, supported by favourable demographics in the medium term.
According to Deloitte, India is an attractive investment destination; however, capital investment, especially in the private sector, has lagged so far. Deloitte questioned why private investment has not yet picked up sustainably and what policymakers can do to take advantage of this opportunity. Deloitte said that since there is constantly changing economic dynamics, there’s no prescribed policy intervention for policymakers to follow because of imprecise and volatile information available to them.
Deloitte India highlighted a three-pronged approach that could persuade investors to invest in capacity building. The first prong involves a well-balanced monetary policy that prioritises growth without letting down the guard on taming inflation. The second prong includes amplifying efforts in spending on infrastructure while consolidating expenses. The third prong involves capitalising on services as manufacturing ramps up. Deloitte’s Rumki emphasised the role of the services sector, stating that growth in services has seen an exceptional rebound and so has its contribution to exports, not only in IT but also in non-IT business services.
Rumki added that India must reap benefits where it has a comparative advantage and build a robust and efficient ecosystem to bring more MNCs to its shore. This will have a spill-over on investments in the manufacturing space as well. She said the world finally seems to have come out of the pandemic shadow and has learned to live with it. However, geopolitical crises, supply chain reorientations, global inflation, and tighter monetary policy conditions will weigh on the outlook. The good news is, India has endured these challenges and has come out of it more resilient. The fact that it will be the fastest-growing economy despite a slowing global economy is a testimony to that.
In conclusion, Rumki hoped that the current pressures on the Indian economy would also pass. The government must continue calibrating policies and try new approaches to boost investments, as it has done in the past. Deloitte India suggested that India could grow at a moderate pace, but only if policymakers focused on investment and provided the right incentives to investors.
India’s economic growth forecast by Deloitte India comes at a time when the global economy is still struggling to recover from the pandemic’s impact. The forecast provides some much-needed optimism for India’s economic prospects. However, the report also points out the need for policymakers to take decisive action to boost private investment, which has been sluggish so far.
Deloitte India’s three-pronged approach to persuading investors to invest in capacity building is a useful framework for policymakers to consider. A well-balanced monetary policy that prioritizes growth without letting down the guard on taming inflation is an essential starting point. Amplifying efforts in spending on infrastructure while consolidating expenses is another crucial element, as it can help boost productivity and create jobs.
It is also heartening to note that India has shown remarkable resilience in the face of various challenges, including geopolitical crises, supply chain reorientations, and global inflation. The fact that India is expected to be the fastest-growing economy despite a slowing global economy is a testament to this resilience.
In conclusion, the report’s recommendations are a timely reminder that policymakers must remain vigilant and take decisive action to boost private investment and create a more conducive environment for economic growth. With the right incentives and policies, India can continue to chart a path of sustainable and inclusive growth, creating jobs and prosperity for all its citizens.
