It is estimated to be 6.75 per cent in FY26, as markets learn to factor in geopolitical uncertainties in their investment and consumption decisions, the US consulting firm said.

Deloitte's FY25 GDP growth estimate is similar to the projections made by the World Bank. It is, however, lower than the projections by the Reserve Bank of India (RBI, 7 per cent) and other agencies.

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It has revised the country’s economic growth prediction for the last fiscal to a range of 7.6 to 7.8 per cent. In January, it had projected growth for fiscal 2023-24 (FY24) in the 6.9-7.2 per cent range.

In its India's economic outlook report, the firm said the rapid growth of the mid-income class has led to rising purchasing power and even created demand for premium luxury products and services.

The number of middle-to-high-income segments is expected to be one in two households by 2030-31, up from one in four now. The company believes this trend will further amplify, driving overall private consumer expenditure growth.

''The global economy is expected to witness a synchronous rebound in 2025 as major election uncertainties get sorted out and the central banks of the West may announce a couple of rate cuts later in 2024. India will likely see improved capital flows and a rebound in exports'' said Deloitte India economist Rumki Majumdar.

Strong growth numbers over the past two years have helped the economy to catch up with the pre-COVID trends. Investment, backed by strong government spending on infrastructure, has helped India maintain a steady recovery momentum, she said.

Concerns about inflation and geopolitical uncertainties feeding into higher food and fuel prices do exist.

Inflation is expected to remain above the RBI’s target level of 4 per cent over the forecast period due to strong economic activity, Majumdar said.

“India is seeing a prominent shift in consumer behaviour toward aspirational spending, which is inevitable in any nation that experiences growing economic prosperity. India's spending share in the luxury and premium goods and services category (such as spending on transport, communication, recreation, etc.) has traditionally been lower than nations such as the United States, China, Japan and Germany. So, there is, therefore, potential for this ratio to increase further as consumer income grows.'' Majumdar added.

Fibre2Fashion News Desk (DS)