Multinational consulting and auditing firm Deloitte estimated that India’s economy will grow 7.2% in the fiscal year 2018-19 owing to higher investment activities and broader market adjustments. While the country is on a growth path, rising price of oil and higher government debt continues to remain a major challenge for the economy. Deloitte provided this estimate in its latest analysis titled India Economic Outlook 2018.
The report stated that India’s economy is on the recovery mode despite the setbacks suffered at the beginning of 2017. Also, the manufacturing slowdown witnessed in early 2017 due to factors like demonetisation has reversed in the recent days. The report also maintained that the services sector is expected to put forth a stable growth in the coming days.
One of the major contributors to FY2018-19’s GDP will be the agriculture sector. In 2017, the agriculture industry suffered due to erratic monsoons and price crash caused by overproduction of crops. In the current fiscal year, the agricultural sector is expected to exceed the original 2.1% growth estimate provided earlier. The higher than expected growth can be attributed to the positive expectations about rabi crops.
The report by Deloitte also provided a favourable outlook for the economies of the United States and Europe. The positive outlook for the United States was attributed to the expected increase in domestic demand and the changes witnessed in the U.S. tax policy. Deloitte provided a positive outlook to the developed economies of Europe mainly because of investor optimism, lower unemployment rates, higher consumption, and lower interest rates.
India’s GDP growth outlook for fiscal year 2017-18 currently stands at 6.7% according to the report. In terms of GDP output, India is the seventh-largest economy in the world with a GDP of $2.2 trillion. The GDP growth outlook provided by Deloitte is marginally conservative compared to the estimate of 7.4% by the IMF and RBI. The World Bank’s GDP estimate released a few days ago pegged India’s growth at 7.3% for the fiscal year 2018-19.