India's Economy Balances Growth Amid Global Uncertainties

India's financial markets, foreign institutional investors (FIIs), and Domestic Institutional Investors (DIIs) demonstrate strong endurance in their operations. From October through December 2024, FIIs pulled funds because of political unrest in the US elections combined with weak business profits and China's September stimulus package. Plans from DIIs served as the primary reason Sensex maintained its constant performance.

Economist Rumki Majumdar from Deloitte India highlighted, "We noticed that prior to 2020, the sensitivity of the Indian capital market movements to changes in FII was much higher. That has come down after 2020."

After weighing these recent trends, Deloitte India expects GDP growth to range between 6.5 and 6.8 percent during the fiscal year 2024-25. During the second fiscal quarter of 2024-25, India achieved GDP growth of 5.4%, which fell below both market forecasts and RBI estimates of 7%.

Food price hikes are an ongoing issue because retail inflation remains above the Reserve Bank of India's 4% target. By setting the repo rate at 6.5%, the central bank shows it wants to rein in rising prices.

India's rural spending and the expansion of the service industry are positive highlights. The services industry, driven by finance, insurance, and real estate, keeps flourishing, enhancing urban income and exports. The increasing exports of high-value manufacturing, particularly electronics and machinery, indicate India's ascent within global value chains.

Deloitte highlighted the importance of India utilizing its internal strengths, proposing economic separation from global uncertainties as a pathway to lasting growth.