India’s annual median GDP growth is forecast at 7 per cent for fiscal 2025 (FY25), according to the latest round of the Federation of Indian Chambers of Commerce & Industry (FICCI) Economic Outlook Survey. The industry sector is anticipated to grow by 6.7 per cent in the current fiscal. According to the survey results, the median GDP growth is estimated at 6.8 per cent and 7.2 per cent for the first and second quarters of FY25, respectively.

The median forecast for CPI-based inflation is projected at 4.5 per cent for FY24, with a range between 4.4 per cent and 5.0 per cent. Regarding the Reserve Bank of India's (RBI) policy actions, economists believe that a cut in the repo rate is expected only in the latter half of the current fiscal as the RBI maintains a cautious approach while closely monitoring the inflation trajectory. The policy repo rate is forecast to moderate to 6.0 per cent by the end of FY25 (March 2025).

With the Union Budget FY25 set to be announced next week, the participating economists shared their expectations for the first major public policy announcement of the new government. They anticipated continuity in policy and further momentum in reforms already being undertaken by the government. On fiscal management and expenditure, the economists commended the government's deft handling of the fiscal side and expected such prudence to continue to ensure macro-economic stability. They suggested that the government could leverage additional resources from robust tax collections and the Reserve Bank of India's dividend transfer to increase spending on social sector schemes, particularly to support the rural economy, as per the survey.

While the target for capital expenditure could be increased, no significant deviation from the ₹11.1 trillion (approximately $132.72 billion) figure indicated in the interim budget for FY25 is expected.

Survey participants indicated that the forthcoming budget could focus on several key priorities. For manufacturing, the budget is expected to create a more conducive environment for industrial growth, including a review of the PLI Scheme to include more labour-intensive sectors and component manufacturing, the creation of large SEZ-like clusters with liberal land and labour laws in the domestic tariff area, and expediting labour law reforms to increase flexibility and competitiveness.

Regarding employment generation and skill development, economists expect the budget to introduce comprehensive measures to boost employment and enhance workforce capabilities. Sustainable development is also expected to remain a focus, with incentives green hydrogen production and energy transition support being key requests from participants.

Support for micro, small, and medium enterprises (MSMEs) remains critical, with suggestions including leveraging the Account Aggregator framework for MSME lending and extending the NPA Classification Period from 90 to 180 days to provide financial breathing room. The surveyed economists emphasised the need for MSMEs to grow in scale and size, highlighting the importance of continued support for this sector.

Fibre2Fashion News Desk (DP)