FICCI forecasts 7.0 % annual GDP growth for India in 2024-25

The Federation of Indian Chambers of Commerce & Industry (FICCI) forecasts an annual median GDP growth forecast for the year 2024-25 at 7.0 per cent.

"Despite persisting headwinds, India's economic growth remains resilient, and the nation remains amongst fastest growing economies in the world," the FICCI's Economic Outlook Survey added.

The industry body said that the median growth forecast for agriculture and allied activities will likely be at 3.7 per cent for 2024-25.

This marks an improvement of growth of about 1.4 per cent reported in the year 2023-24.

The industry body projects that the ebbing El Nino effect, with the expectation of a normal southwest monsoon is likely to bode well for agricultural production. Industry and services sector, on the other hand, are anticipated to grow by 6.7 per cent and 7.4 per cent respectively, in the current fiscal year, the FICCI said in its Economic Outlook Survey.

According to the survey results, median GDP growth is estimated at 6.8 per cent and 7.2 per cent in Q1 2024-25 and Q2 2024-25 respectively.

Further, the median forecast for CPI-based inflation has been put at 4.5 per cent for 2023-24, with a minimum and maximum range of 4.4 per cent and 5.0 per cent respectively, as per the report. While food prices remain sticky with inflation inching up in cereals, fruits and milk, the survey participants expect an easing of prices in the second quarter with kharif output reaching the market.

The economists who were part of the report opined that a cut in the repo rate is expected only in the latter half of the current fiscal year as RBI is expected to continue with its cautious approach keeping a close watch on the inflation trajectory. The policy repo rate is forecasted to moderate to 6.0 per cent by the end of the fiscal year 2024-25 (March 2025).

The economists also anticipated continuity in policy in the Union Budget 2024-25 and further momentum in reforms already being undertaken by the government.

On the subject of fiscal management and expenditure, the participating economists mentioned that the government has done a deft job on the fiscal side. It is expected that such prudence will continue as it is important to ensure macroeconomic stability.

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. On capital expenditure, it was pointed out that the target could be increased but not much deviation was expected from the Rs 11.1 trillion figure that was indicated in the interim budget for FY2025.