GDP growth for 2024-25 projected at 6.4%: FICCI Economic Outlook Survey 

The latest FICCI Economic Outlook survey projects India’s GDP growth in 2024-25 at an average forecast of 6.4%, down slightly from 7.0% in the previous survey conducted in September 2024. This forecast reflects a significant a slowdown compared to the 8.2% growth achieved in 2023-24. These projections are in line with general expectations, indicating moderation in economic activity.

The agriculture sector, including allied activities, is expected to grow by 3.6 percent in 2024-25. Meanwhile, the expansion of industry and service sectors is predicted by 6.3% and 7.3%, respectively. Economic activity is expected to pick up in the second half of the fiscal year, supported by increased government capital spending, festive demand and normalization of post-monsoon industrial activity.

The December 2024 FICCI survey gathered insights from leading economists in industry, banking and financial services.The average Consumer Price Index (CPI) inflation forecast for 2024-25 is 4.8%, in line with the Reserve Bank of India’s forecast for the year.

India’s perspective

Economists expressed cautious optimism for India in light of external headwinds. Consumer spending is expected to pick up on improvements in agriculture, which are likely to boost rural consumption. Food inflation, which has strained household budgets, is expected to ease. while monetary easing by the RBI, which could lower interest rates, could further boost consumption.

On the investment front, the government’s continued focus on capital spending is seen as a key growth driver. Infrastructure investment, particularly in roads, housing, logistics and railways, is expected to maintain momentum in 2025-26. However, there are fears that private sector investment may remain restrained, with a cautious outlook that would prevent large-scale expansion of geopolitics Uncertainties and uneven domestic demand, combined with China’s oversupply, have kept investors cautious, although a recovery in demand as well as improved corporate balance sheets could boost private investment.

Economists say the potential impact of Donald Trump’s policies could cause short-term disruptions, particularly in exports, foreign capital flows and inbound spending. US tax cuts could inflate the fiscal deficit, while higher tariffs and stricter immigration policies could increase expenses.

A less-aggressive-than-expected cut in US interest rates could lead to lower capital inflows to emerging markets such as India, which could lead to volatility in the rupee. Trade tensions, particularly between the US and China, could also disrupt global supply chains and increase input spending in the short term However, economists believe the US may take a more measured approach to India.

On the positive side, India is benefiting from shifts in global supply chains, particularly in electronics manufacturing and pharmaceuticals. India’s pharmaceutical industry is well positioned to capitalize on disruptions in global supply chains, particularly for generics and active pharmaceutical ingredients for example semiconductors, electronics and automotive components, can attract foreign direct investment, especially targeted industrial policies case.

Economists recommend that India focus on reducing tariffs on some US imports, diversifying export markets and strengthening cooperation in emerging areas such as artificial intelligence, clean energy and cyber security.

Focus on Union Budget

As India prepares for the Union Budget 2025-26, which is expected on February 1, 2025, economists have highlighted the key areas of policy focus are also continued investments in welfare schemes such as MGNREGA, PMGSY and PMAY.Economists expect forthcoming 10-15 percent increase in capital expenditure in the budget, taking into account its strong multiplier effect.

Further recommendations include increasing agricultural productivity, improving rural infrastructure and expanding agricultural value chains. Investments in cold storage and supply chain efficiency are critical to managing inflationary pressures and minimizing food waste. The manufacturing sector should continue to receive attention, and land, labor and financial sector reforms are needed to improve the ease of doing business.policy certainty and regular regulatory reviews are also vital to sustaining growth for

Finally, with India’s export prospects under scrutiny, economists are calling for continued support for exporters, including expansion of the interest rate equalization scheme and increased marketing support allocations.

Global growth

Looking ahead to 2025, economists expect global growth to maintain a cautiously positive trajectory, with easing prices and monetary policy easing in key economies, as well as strong growth in interest-sensitive sectors and a continued recovery in services , particularly in semiconductors, electronics and artificial intelligence, as well as focusing on green energy transitions, likely will encourage investment.

However, rising geopolitical tensions and the potential fragmentation of global trade may also hamper growth, which could also affect trade relations and economic conditions , the ongoing conflict in the Middle East remains a potential risk for energy markets.

Challenges related to high levels of public debt, climate-induced disruptions, and the vulnerability of agriculture- and commodity-based economies further complicate the global outlook.