The Federation of Indian Chambers of Commerce and Industry forecast a median annual GDP growth rate of 7 percent in 2024-25. On its part, it said, the Union Budget 2024-25 needs to focus on tax reforms for job creation, innovating for the future, and sustainable development. The industry body FICCI, in its 'Economic Outlook Survey,' estimated that in the fiscal year 2024-25, Q1 and Q2 GDP growth would print at 6.8% and 7.2%, respectively.
As per the survey, the median growth for agriculture and allied activities is pegged at 3.7 percent for 2024-25. "The same is an improvement compared to 1.4 percent growth registered in 2023-24. The diminishing negative effects of El Nino also bring along the expectations of normal southwest monsoon, which is likely to be supportive of higher agriculture production," the industry body said.
On the other, the industry and the service sector would grow by 6.7 percent and 7.4 percent this fiscal year.
Besides, the mean forecast has pegged inflation of 4.5% based on the CPI for 2023-24, with the minimum and the maximum at 4.4% and 5% respectively. "Though the food price inflation has remained at the stubbornly high level, particularly of cereals, fruits, and milk, our survey respondents perceive that in the second quarter, with the start of the kharif output entering the market, some compression would happen in the prices," said the FICCI.
Economists expect the policy repo rate to moderate to 6 percent by the end of financial year 2024-25 (March 2025).
Fiscal management and expenditure won praise from the economists who participated. "Such carefulness is expected to continue, as it is critical for securing the macro-economic fundamentals. The government could ensure higher fiscal space, in case it would like to do so, given strong tax collections and expected good return from the dividend transfer by the Reserve Bank of India," stated the FICCI survey report.
On capital expenditure, indicated was that the target could be increased but not substantially away from the Rs 11.1 trillion that the interim budget for FY2025 had mentioned.
The surveyed economists also anticipated some tax reforms aimed at spurring economic activity. "Potential revisions in tax rates to boost disposable income and consumption, especially for lower rings of the society, are expected," they said.
Besides, the increase in limits under Section 80C and other such sections would boost long-term saving and investment. Other reports also spoke of expectations that the capital gains tax regime would be simplified and that the GST slabs would see further streamlining.
The next budget is supposed to unveil a full-fledged plan of action to spur employment and build the potential of workforces. Suggestions from surveyed economists include announcements of an employment-linked incentive scheme, urban version of MGNREGA, ramping up investment in labour skilling programs and soft infrastructure, and going even further in myriad of sectoral measures and targeted policies and support systems towards increasing female labour participation rate.
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