A latest survey by FICCI predicts an annual median GDP growth forecast for the year 2024-25 at 7.0 per cent and CPI inflation at 4.5 per cent for the same period.
Despite persisting headwinds, India’s economic growth remains resilient, and the nation remains amongst fastest growing economies in the world. While a 7 per cent GDP growth is expected, a minimum and maximum growth of 6.6 percent and 7.5 percent respectively is further expected.
According to the survey, median GDP growth is estimated at 6.8 per cent and 7.2 per cent in Q1 2024-25 and Q2 2024-25 respectively.
The median growth forecast for agriculture and allied activities has been put at 3.7 per cent for 2024-25, indicating an improvement with respect to 1.4 percent growth seen in the last fiscal year. With the withdrawal of the El Niño effect and the IMD predicting a normal southwest monsoon, kharif production is anticipated to be normal. A favourable base is expected to support agriculture growth.
Industry and services sector are anticipated to clock 6.7 per cent and 7.4 per cent growth respectively during the current fiscal, with respect to respective growth rates of 9.5 per cent and 7.6 per cent in the last fiscal.
Investments are anticipated to remain strong, driven by the momentum in government capital expenditure and crowding-in of private investments. Further, private consumption is expected to benefit from a recovery in agricultural production and some easing in inflation levels going forward, said the report.
CPI Inflation & Fiscal Deficit
CPI based inflation has a median forecast of 4.5 percent for 2024-25, with a minimum and maximum range of 4.4 percent and 5.0 percent, respectively, revealed the report.
This matches with RBI’s projection indicated in the latest monetary policy announcement in June 2024.
The headline retail inflation rose to a four-month high of 5.1 percent in the month of June 2024. Food prices remain high and sticky with inflation inching up in cereals, fruits, and milk products. Also, pulses and vegetables segments maintained double-digit inflation levels, the report added.
The median fiscal deficit to GDP ratio has been put at 5.1 per cent for the fiscal year 2024-25. This is in line with the targeted fiscal deficit for 2024-25 announced in Interim Budget earlier this year, it further stated.
Policy Rates
Policy repo rate is forecasted to moderate to 6 per cent by the end of the fiscal year 2024-25, with a minimum and maximum range of 5.5 per cent and 6.25 per cent respectively, the report highlighted.
RBI is expected to continue with its cautious approach keeping a close watch on the inflation trajectory. A rate cut seems plausible only in the latter part of the current financial year.
