FICCI forecasts 7% annual GDP growth for India in 2024-25

The Federation of Indian Chambers of Commerce & Industry (FICCI) has forecasted a 7.0% annual median GDP growth for India in the fiscal year 2024-25, according to its latest Economic Outlook Survey.

“Despite persisting headwinds, India’s economic growth remains resilient, and the nation remains amongst fastest growing economies in the world,” the Survey states.

The report predicts a 3.7% growth in agriculture and allied activities for 2024-25, a significant improvement from the 1.4% growth reported in 2023-24. This optimistic outlook is attributed to the expected weakening of the El Niño effect and anticipation of a normal southwest monsoon.

The industry and services sectors are projected to grow by 6.7% and 7.4% respectively in the current fiscal year. The survey estimates GDP growth at 6.8% in Q1 and 7.2% in Q2 of 2024-25.

Inflation forecasts remain moderate, with the median CPI-based inflation projected at 4.5% for 2023-24. Economists expect food prices to ease in the second quarter as the kharif crop reaches markets.

Regarding monetary policy, the report suggests that the Reserve Bank of India (RBI) may maintain its cautious stance, with a potential cut in the repo rate only in the latter half of the fiscal year. The policy repo rate is expected to moderate to 6.0% by March 2025.

The survey participants anticipate policy continuity in the upcoming Union Budget 2024-25, with further momentum in ongoing government reforms. They commend the government’s fiscal management and expect this prudence to continue.

According to economists, the government has an opportunity to leverage additional resources from robust tax collections and the Reserve Bank of India’s dividend transfer. This fiscal headroom could be used to increase the spend on social sector schemes especially to support the rural economy.

Regarding capital expenditure, while an increase in the target is possible, significant deviation from the Rs 11.1 trillion figure indicated in the interim budget for FY2025 is not expected.