New Delhi [India], May 5 : India will likely grow at a "moderate pace between 6 per cent and 6.5 per cent in FY2023-24" while the global economy continues to struggle, Deloitte India said on Friday.
"Growth in the next year will likely pick up as investment kickstarts the virtuous circle of job creation, income, productivity, demand, and exports supported by favourable demographics in the medium term," said Rumki Majumdar, Economist, Deloitte India.
"We expect investments to see a turnaround and thrust the economy into sustainable growth. India will likely grow at a moderate pace between 6 per cent and 6.5 per cent in FY 2023-24, as the global economy continues to struggle," said Rumki Majumdar.
However, capital investment, especially in the private sector, has lagged so far, Deloitte said in a statement on Friday. India is an attractive investment destination is a point well-emphasised. According to Deloitte, the question is why private investment has not yet picked up sustainably, and what can policymakers do to take advantage of this opportunity?
Since there is constantly changing economic dynamics, Deloitte said there's no prescribed policy intervention for policymakers to follow because of imprecise and volatile information available to them. That said, the government must continue calibrating policies and try new approaches to boost investments, as it has done in the past.
A three-pronged approach will persuade investors to invest in capacity building, Deloitte said.
"This would include a well-balanced monetary policy that prioritises growth without letting down the guard on taming inflation; amplifying efforts in spending on infrastructure while consolidating expenses; and capitalising on services as manufacturing ramps up," said Rumki. She emphasises on the role of the services sector.
According to Rumki, 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.
"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 added.
"This would include a well-balanced monetary policy that prioritises growth without letting down the guard on taming inflation; amplifying efforts in spending on infrastructure while consolidating expenses; and capitalising on services as manufacturing ramps up," said Rumki. She emphasises on the role of the services sector.
"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. 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 added.
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. We hope that the current pressures on the economy too shall pass," concludes Rumki.
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