India's economic growth will accelerate to 7.2 per cent in the current fiscal buoyed by manufacturing activity even as rising oil prices and high government debt remain a challenge, Deloitte said today.


The agriculture sector is expected to grow higher than the estimated 2.1 per cent in the current fiscal year on account of positive prospects on Rabi harvest and a normal monsoon, contributing significantly to the national GDP, said the India Economic Outlook Report 2018.


"India's growth prospects remain promising and the economy will continue to grow at 7.2 per cent in 2018-19. The gradual recovery in industrial production bodes well for the economy, reflecting a possible strengthening of domestic demand and a further build-up in global trade activity," it said.


The Indian economy grew 6.6 per cent in the last fiscal as it battled the lingering effects of demonetisation in 2016. Deloitte's growth forecast for this fiscal is conservative compared to that of the Reserve Bank and the International Monetary Fund which projected India to grow 7.4 per cent, and Asian Development Bank and Fitch which estimated growth at 7.3 per cent.


However, the report cautions that the increasing inflationary pressures, widening fiscal deficit and the rising debt burden could pose challenges to the economy. -- PTI