New Delhi, October 22
India's annual GDP growth rate is projected to 7.0 per cent-7.2 per cent for the fiscal year 2024-25, despite a recent slowdown in quarterly growth, according to Deloitte India's Economy Outlook for October 2024.
In the April-to-June quarter of FY 2024-25, India's GDP grew by 6.7 per cent year-over-year, marking the slowest growth in the past five quarters.
Nonetheless, the nation continues to rank among the world's fastest-growing major economies. Deloitte forecasts GDP growth to remain robust at 6.5 per cent-6.8 per cent for the subsequent fiscal year, driven by positive domestic factors such as strong manufacturing activity, stable oil prices, and anticipated U.S. monetary easing post-elections, which could potentially boost capital inflows.
In its October policy statement, the RBI maintained India's GDP growth projection at 7.2 per cent for FY25.
Dr Rumki Majumdar, economist, Deloitte, noted, "Domestic factors such as moderating inflation, especially in food, better rainfall and record Kharif production, stronger government spending in the second half of the year, and rising investment in manufacturing will help in India's growth this year. Higher capital inflows after the US Fed's rate cuts may translate into long-term investment and job opportunities as multinational companies worldwide look to further reduce operational costs."
However, she also cautioned that tempered global growth and delayed recovery in Western economies could weigh on India's export outlook for the next fiscal year.
For the first time since the pandemic, the MGNREGA scheme's 12-month moving average for employment demand fell below pre-pandemic levels in August 2024, suggesting that individuals are finding better-paying job opportunities elsewhere.
The latest PLFS annual data for 2023-24 shows a recovery in employment, particularly in the secondary sector, driven by job creation in construction.
Government initiatives such as the National Infrastructure Pipeline and increased capital expenditure have played a significant role in boosting construction jobs, with the sector's employment share rising from 11.6 per cent in 2019-20 to 12.2 per cent in 2023-24.
The manufacturing and services sectors also experienced modest improvements in employment shares, supported by policies like the production-linked incentive (PLI) schemes, which helped manufacturing employment recover to 11.4 per cent post-pandemic.
The services sector has seen a notable increase in employment, with its share rising from 28.9 per cent in 2022-23 to 29.7 per cent in 2023-24.
Female labour force participation has notably increased, with the rate for individuals aged 15 and above rising from 22 per cent in 2017-18 to 40.3 per cent in 2023-24.
The surge is more pronounced in rural areas, where participation jumped by 22.8 percentage points, compared to a 7.8 percentage point increase in urban areas, signalling improved inclusivity and empowerment of women in India's workforce.
Despite these positive trends, challenges persist, particularly regarding the high share of informal employment in sectors like agriculture and construction, which are characterized by casual and self-employed workers lacking social protection.
The emphasis on low-skilled construction jobs and modest improvements in salaried employment contributions across sectors suggest that India needs more formal, high-quality jobs to achieve better income distribution.
Future job growth is expected in emerging industries such as semiconductors, electronics, and clean energy, where specialized skills and advanced education are essential. India's push for clean-energy alternatives is likely to generate green jobs across multiple sectors, including energy, agriculture, tourism, and transport.
Deloitte's outlook remains optimistic due to several economic drivers that could enhance growth prospects. The thriving manufacturing sector, stable oil prices, and potential monetary policy easing in the U.S. are expected to reduce production costs and stimulate investments.
This, in turn, would create new employment opportunities and bolster economic stability, even as the global outlook remains uncertain.