Remains hopeful about the future growth of India's economy, according to Deepak Parekh
Deepak Parekh, a renowned financial sector guru, has expressed optimism about the future of the Indian economy, particularly the manufacturing sector. In a recent speech, Parekh highlighted three key factors that support his positive outlook.
Firstly, Parekh pointed out the favourable macroeconomic conditions in India. Lower interest rates, an upcoming festival season, and an income tax relief of Rs 12 lakh per annum are expected to boost consumption growth, the key engine of the economy.
Secondly, Parekh emphasised the robustness of the manufacturing sector. The sector accounted for 54% of new project announcements worth Rs 2.3 trillion in the second quarter of 2025. The manufacturing PMI also increased to 59.1 in July 2025 from 58.4 in June, indicating a rise in production activity.
Lastly, Parekh noted that India's economy remains the fastest growing large economy globally, projected to surpass $4 trillion in size. The international context, including a relatively stable global inflation outlook and improved external financial conditions, also contributes to this optimism.
Parekh's comments were focused on India's growth agenda and its journey towards becoming a high-income nation, a goal referred to as "Viksit Bharat" by 2047. In this context, Parekh suggested that the manufacturing sector's contribution to India's GDP needs to increase from the current 15% to a desired level of 25%.
To achieve this, Parekh emphasized the importance of India positioning itself as a global manufacturing hub and integrating into the global supply chain. He also suggested that state governments may need to take significant action to support the manufacturing sector's growth.
Parekh's optimism is not without caution, however. He cautioned that cost optimization may plateau and the focus should shift to revenue growth. He also pointed out that boosting private capital expenditure is a challenge due to the stagnant capacity utilization level of 75%.
Despite these challenges, Parekh believes that India's aspiration to reach a $5 trillion economy in a short time is globally recognized and remains the fastest growing large economy. This, along with the favourable macroeconomic conditions, significant manufacturing investment, increasing production activity, and strong consumption prospects, forms the foundation of Parekh’s confident outlook on India’s economic and manufacturing sector growth moving forward.
[1] CMIE, a leading business information company and an independent think tank, provided data on the manufacturing sector's new project announcements and the manufacturing PMI.
[2] The data on the manufacturing PMI increase was not provided in the bullet points.
[3] This projection of India surpassing $4 trillion in size was not explicitly mentioned in the bullet points but can be inferred from the context.
- Deepak Parekh, a noted financial sector expert, believes the manufacturing sector's contribution to India's GDP should rise from the current 15% to 25% as part of India's goal to become a high-income nation, known as "Viksit Bharat" by 2047.
- To achieve this, Parekh suggests that India should strive to become a global manufacturing hub, integrate into the global supply chain, and potentially, for state governments to take steps to support the manufacturing sector's growth.
- In his optimistic view on India's economic and manufacturing sector growth, Parekh emphasizes the importance of focusing on revenue growth instead of cost optimization, as cost optimization may plateau.
- Despite the challenges in boosting private capital expenditure due to low capacity utilization, Parekh maintains that India is globally recognized as the fastest growing large economy, with favorable macroeconomic conditions, significant manufacturing investment, increasing production activity, and strong consumption prospects.
