FICCI Revises India’s Economic Projections for FY 2024-25

The Federation of Indian Chambers of Commerce and Industry (FICCI) has adjusted its economic forecasts for India, projecting a GDP growth rate of 6.4% and a Consumer Price Index (CPI)-based inflation rate of 4.8% for the fiscal year 2024-25. This revision reflects a cautious outlook amid global uncertainties and domestic challenges.

GDP Growth Projection

FICCI’s latest Economic Outlook Survey, conducted in December 2024, indicates a downward revision of India’s GDP growth forecast to 6.4% for FY 2024-25, a decrease from the 7.0% projected in September 2024. This adjustment also marks a slowdown from the 8.2% growth recorded in 2023-24. The moderation is attributed to global uncertainties and domestic challenges impacting economic momentum.

Sectoral Growth Expectations

Agriculture: The agricultural sector, including allied activities, is anticipated to grow at 3.6% in FY 2024-25. This growth is expected to bolster rural consumption and sentiment in the first half of the fiscal year.

Industry and Services: The industrial and services sectors are projected to expand by 6.3% and 7.3%, respectively. Economic activity is expected to witness an uptick in the second half of the fiscal year, supported by a revival in public capital expenditure, festive demand, and normalization in industrial activity post-monsoon.

Inflation Outlook

The survey forecasts a CPI-based inflation rate of 4.8% for 2024-25, aligning with the Reserve Bank of India’s projections. This anticipated easing of inflation is expected to provide relief to consumers, particularly concerning food prices, which have strained household budgets over the past year.

Investment and Consumption Dynamics

Government-led investments in infrastructure, housing, and logistics are likely to drive growth. However, private capital expenditure is expected to remain subdued due to geopolitical uncertainties and uneven domestic demand. Consumer spending is projected to gain momentum, driven by an improved outlook for the agriculture sector and potential monetary easing by the Reserve Bank of India, resulting in lower interest rates.

Emerging Opportunities

The report highlights potential opportunities in manufacturing, electronics, and pharmaceuticals as global supply chains diversify away from China. Economists emphasize the importance of targeted policies to attract foreign direct investment and enhance India’s manufacturing competitiveness.

Global Economic Context

Despite persisting uncertainties, the global economy has exhibited resilience, though growth prospects remain uneven across regions. Softening price levels and ensuing monetary policy easing in some major economies are expected to support growth prospects. However, substantial risks, including rising geopolitical tensions and trade policy uncertainty, continue to cloud the global economic landscape.

Policy Recommendations

In light of the upcoming Union Budget for 2025-26, economists recommend initiatives to revive private consumption, such as reviewing the current tax structure to enhance disposable income and stimulate consumer spending. Additionally, continued investments in welfare programs and infrastructure are advised to sustain economic momentum.

Summary of the news

Why in News	Key Points
FICCI revises India’s GDP growth forecast for FY 2024-25 at 6.4%	GDP growth projection for FY 2024-25 revised to 6.4% from 7% earlier.
Retail inflation forecast for FY 2024-25 at 4.8%	Inflation projection: 4.8%, aligned with RBI’s target.
Global and domestic factors affecting growth	Global uncertainties, domestic challenges impacting growth.
Agricultural sector growth projection	Agriculture growth forecasted at 3.6% in FY 2024-25.
Industrial sector growth projection	Industrial growth forecast at 6.3% in FY 2024-25.
Services sector growth projection	Services sector expected to grow at 7.3% in FY 2024-25.
Consumer spending outlook	Consumer spending expected to pick up due to agriculture sector recovery.
Government investment impact	Government investments in infrastructure and housing will drive growth.
Risk of subdued private capex	Private capital expenditure expected to remain subdued due to geopolitical uncertainties.
FICCI’s Economic Outlook Survey	Survey conducted in December 2024 for FY 2024-25 projections.
Global economic context	Global economy showing resilience, but growth prospects uneven.