India, with the right policy mix, could potentially raise its GDP growth rate closer to 8 per cent, becoming the largest contributor to global growth by the end of this decade, Barclays Research said in a new report. 

This report, which is the latest edition of series of reports titled India’s Breakout Moment, noted that the ability to raise its growth rates will fundamentally depend on its ability to self-finance investment, in order to maintain macro stability. 

Higher savings should be endogenous amid an increase in per capita income and fiscal consolidation, it added. 

To achieve higher growth, India needs greater investment, and for that, the country’s savings pool first needs to rise, lest the external front of macro stability becomes vulnerable amid faster GDP growth, Rahul Bajoria, Managing Director & Head of EM-Asia (ex-China) Economics, Barclays said in the report. 

The factors that can boost the savings rate over this decade appear to be in place, given changes in consumption preferences, demography and fiscal consolidation. 

 “Our estimates suggest that the household savings rate can potentially rise by at least 2.7 percentage points (pp) by FY30 as the marginal propensity to consume edges lower amid rising per capita income”, report said. 

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Fiscal consolidation aims suggest public sector dis-savings are also likely to decline over the medium term by around 1.3pp; both combined we estimate could boost overall gross savings by 4pp of GDP.

Growing household savings and declining public dis-saving could boost domestic savings to levels over and above what should be sufficient to finance the economy’s investment requirements.

 The likelihood of surplus domestic savings, along with the central government’s announced aim to cut the budget deficit by FY26, suggest a reduced need for further fiscal consolidation as well as reduced external financing requirements, thereby maintaining macro stability amid higher growth, it added. 

India may also move closer towards current account balance if it can maintain its productivity ratios, as this would imply reduced investment needs to generate higher growth, according to Barclays report.

This, in turn, should ensure that domestic savings would be enough to finance investments, diminishing the need to rely materially on external capital inflows. I


Barclays Research sees headline growth likely to have slowed down in October-December 2023 to 6.7 per cent compared with 7.6 per cent in Q3 last fiscal.  This 6.7 per cent expected growth print is however higher than the 4.5 per cent growth recorded in October-December 2022.

A slowdown in state-led capex, which has been propelling investment, likely contributed to the expected deceleration in October-December 2023. However, slower GDP growth should be seen in the context of elevated growth of 7.7 per cent in H1 FY2023-24 (April-September 2023).

Value added in manufacturing for the quarter under review was likely aided by an improvement in profit margins, while growth in most other sectors decelerated. Domestic demand continues to drive GDP, but early signs of recovery in external demand likely supported net exports, it said in a separate research note. 

For its October-December 2023 forecast, Barclays expects services to continue to be the largest contributor to Gross Value Added (GVA) growth, though the contribution from industry likely inched higher on support from the manufacturing sector. Growth in services was likely broadly steady compared with July-September 2023 driven by ‘financial and real estate services’, and ‘trade and transport’.

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“We expect industrial sector to show the fastest growth among the three major sub- sectors, though it will likely slow from elevated print of July-September 2023, driven by slower growth in utilities and construction”, the research note authored by Bajoria said. 

“Growth in the manufacturing sector likely remained fairly robust, as despite slower volume production (based on IP data), we think corporate profit margins likely improved in October-December 2023 on a reduction in input costs”.

Activity in the construction sector likely slowed owing to sluggishness in public capex. Agriculture growth is expected to print in line with trend, with lower kharif harvest production balanced by robust rabi sowing activity and growth in allied sectors, according to Barclays Research.