FICCI projects India's GDP growth at 6.4% for 2024-25, inflation at 4.8%

India's GDP growth is expected to moderate to 6.4 percent in 2024-25, according to the latest FICCI Economic Outlook Survey released on Wednesday. This projection marks a decrease from the 8.2 percent growth recorded in 2023-24 and is lower than the 7.0 percent forecast made in September last year.

The survey, conducted in December 2024, indicates that agriculture sector growth is projected at 3.6 percent, while industry and services sectors are expected to grow at 6.3 percent and 7.3 percent respectively. The Reserve Bank of India's target for CPI-based inflation stands at 4.8 percent for 2024-25, aligning with the central bank's December monetary policy announcement.

Economists participating in the survey anticipate an uptick in economic activity during the second half of the fiscal year, driven by public capital expenditure, festive demand, and normalization of industrial activity after monsoon. The government's focus on infrastructure investments in roads, housing, logistics, and railways is expected to maintain growth momentum into 2025-26.

However, private sector investment remains subdued due to geopolitical uncertainties and uneven domestic demand. The survey notes that while corporate balance sheets have improved and capacity utilization rates remain stable, businesses are cautious about large-scale expansions.

The global economic context presents both opportunities and challenges for India. The potential return of Donald Trump to U.S. leadership could impact trade relations and capital flows. Economists suggest this might lead to short-term disruptions in exports and foreign investment, though they expect the U.S. to maintain a measured approach toward India.

India's position in global supply chains could strengthen as companies seek alternatives to China. The country's pharmaceutical industry and emerging electronics manufacturing sector are particularly well-positioned to benefit from these shifts, according to the survey respondents.

The FICCI survey, which has been tracking economic indicators for over two decades, draws responses from economists representing industry, banking, and financial services sectors. The findings come as India prepares for its Union Budget 2025-26, scheduled for presentation on February 1, 2025.

Looking ahead, economists recommend reviewing tax structures to boost consumer spending and maintaining focus on infrastructure development. They also emphasize the need for reforms in land, labor, and financial sectors to improve business conditions and sustain growth momentum.