India’s economic outlook

Optimism prevails as India records 8.2% growth in the FY 2023-2024, exceeding all expectations for the third consecutive year. Deloitte forecasts 7.0-7.2% growth for FY 2024-2025 supported by a rebounding rural economy, strong manufacturing growth, robust bank balance sheets, and increased exports.

Amidst the robust growth, new spending patterns are emerging in both rural and urban India. There is a visible shift towards spending on discretionary durable goods (including automobiles and electric and electronic goods) as well as services as evidenced by the data released by the Household Consumption Expenditure Survey 2022-23. This points to a broad-based shift in the composition of consumption toward more non-food and discretionary items, reflecting changing lifestyles and preferences that are here to stay. The rise of a new generation of consumers is creating new business opportunities.

At the same time, there are concerns about the declining share of spending on education and disparity in spending patterns across Indian states, which require prudent government efforts to steer spending patterns strategically. We believe that the right policy push from the government will help address urban and rural spending gaps in the coming years resulting in a sustained growth in overall consumer demand from a larger consumer base.