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

The latest FICCI Economic Outlook Survey projects India’s GDP growth for 2024-25 at a median forecast of 6.4%, a slight dip from the 7.0% estimated in the previous survey conducted in September 2024. This forecast reflects a notable slowdown compared to the 8.2% growth achieved in 2023-24. These projections align with general expectations, indicating a moderation in economic activity. 

The agricultural sector, including allied activities, is expected to grow by 3.6% in 2024-25. Meanwhile, the industry and services sectors are projected to expand by 6.3% and 7.3%, respectively. Economic activity is anticipated to pick up in the second half of the fiscal year, supported by increased public capital expenditure, festive demand, and the normalization of industrial activity post-monsoon. 

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

Outlook for India 

For India, economists expressed cautious optimism in light of external headwinds. Consumer spending is expected to pick up, driven by improvements in the agricultural sector that are likely to boost rural consumption. Food inflation, which has strained household budgets, is projected to ease, while monetary easing by the RBI, potentially lowering interest rates, could further stimulate consumption. 

On the investment front, the government’s continued focus on capital expenditure is seen as a key growth driver. Infrastructure investments, particularly in roads, housing, logistics, and railways, are expected to maintain momentum into 2025-26. However, there are concerns that private sector investment may remain subdued, with a cautious outlook deterring large-scale capacity expansions. Geopolitical uncertainties and uneven domestic demand, combined with oversupply from China, have kept investors cautious, although a rebound in demand, along with improved corporate balance sheets, may boost private investment. 

Economists said the potential impact of Donald Trump’s policies may cause short-term disruptions, particularly in exports, foreign capital flows, and input costs. Tax cuts in the US could inflate the fiscal deficit, while higher tariffs and stricter immigration policies could drive up costs.  

A reduction in US interest rates, less aggressive than expected, could result in reduced capital inflows to emerging markets like India, potentially causing fluctuations in the rupee. Trade tensions, particularly between the US and China, may also disrupt global supply chains and increase input costs in the short term. However, economists believe the US may adopt a more measured approach toward India. 

On the positive side, India stands to benefit from shifts in global supply chains, particularly in electronics manufacturing and pharmaceuticals. India’s pharmaceutical industry is well-positioned to capitalise on disruptions in global supply chains, particularly in generics and active pharmaceutical ingredients. The country’s role as a manufacturing hub for sectors such as semiconductors, electronics, and automotive components could attract foreign direct investment, especially with targeted industrial policies. 

The economists recommend that India focus on reducing tariffs on certain US imports, diversifying export markets, and strengthen collaboration in emerging areas like artificial intelligence, clean energy and cybersecurity. 

Focus for Union Budget 

As India prepares for the Union Budget of 2025-26, expected on February 1, 2025, economists highlighted key areas for policy focus. Reviving private consumption is a priority, with recommendations for a review of the current tax structure to enhance disposable income and stimulate spending. Continued investments in welfare programmes such as MGNREGA, PMGSY and PMAY are also suggested. Economists expect an increase in capital expenditure by 10-15% in the upcoming Budget, given its strong multiplier effects. 

Further recommendations include boosting agricultural productivity, improving rural infrastructure, and enhancing agricultural value chains. Investments in cold storage facilities and supply chain efficiency are critical for managing inflationary pressures and minimising food wastage. The manufacturing sector should continue to receive attention, and reforms in land, labour and the financial sector are necessary to improve the ease of doing business. Policy certainty and regular assessments of regulations are also vital for sustaining growth. 

Finally, with India’s export prospects under scrutiny, economists call for continued support for exporters, including extending the interest equalisation scheme and increasing marketing support allocations. 

Global growth 

Looking to 2025, economists expect global growth to maintain a positive trajectory, tempered by caution. Softening prices and monetary policy easing in key economies, along with strong growth in interest-sensitive sectors and a continued recovery in services, are expected to support global growth. Advances in technology, particularly in semiconductors, electronics, and artificial intelligence, along with a focus on green energy transitions, are likely to spur investment. 

However, substantial risks persist. Rising geopolitical tensions and trade policy uncertainties, such as the potential fragmentation of global trade, could impede growth. Political changes in the US are also a factor to watch, with potential impacts on trade relations and economic conditions. Additionally, the ongoing conflict in the Middle East remains a potential risk to energy markets. 

Challenges related to high public debt levels, climate-induced disruptions, and the vulnerability of economies reliant on agriculture and commodities add further complexity to the global outlook.