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FICCI projects 7% GDP growth for India in 2024-25, expects repo rate to moderate by the end of fiscal year
FICCI's survey forecasts GDP growth at 7.0% for 2024-25, with focus areas in the upcoming budget on fiscal management, taxation reforms, and employment generation. Economists anticipate stable kharif production and strong investments in government and private sectors.
The latest round of FICCI’s Economic Outlook Survey projects an annual median GDP growth for 2024–25 at 7.0%, with estimates ranging from 6.6% to 7.5%. Despite ongoing challenges, India's economic growth remains strong, positioning it among the fastest-growing economies globally.
Conducted in July 2024, the FICCI survey gathered insights from leading economists representing industry, banking, and financial services sector.
The median growth forecast for agriculture and allied activities is set at 3.7 percent for 2024-25, marking an improvement from the 1.4 percent growth seen in the previous fiscal year. With the withdrawal of the El Niño effect and the IMD's prediction of a normal southwest monsoon, economists contributing to the FICCI survey expect stable kharif production.
Economists anticipate the industry and services sectors to achieve growth rates of 6.7% and 7.4%, respectively, during the current fiscal, compared to 9.5 percent and 7.6% in the last fiscal year. They expect investments to remain strong, driven by the momentum in government capital expenditure and the crowding-in of private investments.
Private consumption is also expected to benefit from a recovery in agricultural production and some easing in inflation levels going forward.
On the inflation front, CPI-based inflation has a median forecast of 4.5 percent for 2024-25, with a minimum and maximum range of 4.4 percent and 5.0 percent, respectively. This aligns with the RBI’s projection indicated in the latest monetary policy announcement in June 2024.
Headline retail inflation rose to a four-month high of 5.1 percent in June 2024. Food prices remain high and sticky, with inflation inching up in cereals, fruits, and milk products. Additionally, the pulses and vegetables segments maintained double-digit inflation levels.
In terms of policy, economists forecast the policy repo rate to moderate to 6 percent by the end of the fiscal year 2024-25, with a minimum and maximum range of 5.5 percent and 6.25 percent, respectively. Economists expect the RBI to continue its cautious approach, keeping a close watch on the inflation trajectory. A rate cut seems plausible only in the latter part of the current financial year.
Based on the responses of the participating economists, the median forecast for exports is set at USD 455.0 billion, and for imports, it is at USD 725.0 billion for 2024-25. The current account deficit (CAD) as a percentage of GDP is projected at 1.0 percent for the current fiscal year. Participants expect the USD/INR exchange rate to be 83.5 by the end of the current financial year.
Economists anticipate continuity in policy and further momentum in reforms already being undertaken by the government in the upcoming Union Budget 2024-2025.
Survey participants indicated that the focus of the forthcoming budget could be on fiscal management and expenditure, taxation reforms, employment generation and skill development, agriculture, manufacturing, housing, MSMEs, education and healthcare, sustainability, and innovation.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Business NewsEconomyFICCI projects 7% GDP growth for India in 2024-25, expects repo rate to moderate by the end of fiscal year
First Published:18 Jul 2024, 02:52 PM IST
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