New Delhi, July 18: The latest round of Federation of Indian Chambers of Commerce and Industry (FICCI)’s Economic Outlook Survey puts forth an annual median GDP growth forecast for the year 2024-25 at 7 per cent.
The median growth forecast for agriculture and allied activities has been put at 3.7 per cent for 2024-25.
This marks an improvement vis-à-vis growth of about 1.4 per cent reported in the year 2023-24. Ebbing El Nino effect with expectation of a normal southwest monsoon are 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, stated a FICCI release.
The present round of FICCI’s Economic Outlook Survey was conducted in the month of July 2024 and drew responses from leading economists representing industry, banking and financial services sector. The economists were requested to share their forecast for key macro-economic variables for the year 2024-25 and for Q1 (April-June) and Q2 (July-September) FY25.
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. While food prices remain sticky with inflation inching up in cereals, fruits and milk, the survey participants expect easing of prices in second quarter with kharif output reaching the market.
On RBI’s policy action, economists were of the view 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. Policy repo rate is forecasted to moderate to 6.0 per cent by the end of the fiscal year 2024-25 (March 2025).
Given the Union Budget 2024-25 will be announced next week, the participating economists were asked to share their expectations from the first major public policy announcement of the new government. The economists anticipated continuity in policy 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 macro-economic stability. According to economists, government has an opportunity to leverage additional resources from robust tax collections and 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 Rs 11.1 trillion figure that was indicated in the interim budget for FY2025, the release further stated.
