FICCI Forecasts 7% GDP Growth In FY25, Highlights Focus On Tax Reforms And Job Creation In Budget

Union Budget 2024: Regarding capital expenditure, it was noted that while the target could increase, deviations from the interim budget figure of Rs 11.1 trillion for FY2025 were not expected

Union Budget 2024: The Federation of Indian Chambers of Commerce and Industry (FICCI) projected an annual median GDP growth rate of 7 per cent for the fiscal year 2024-25. They emphasised that the Union Budget 2024-25 should prioritise taxation reforms, employment generation, innovation, and sustainable development.

According to FICCI's 'Economic Outlook Survey,' the median GDP growth is expected to be 6.8 per cent in Q1 2024-25 and 7.2 per cent in Q2 2024-25. The survey also forecasts a median growth rate of 3.7 per cent for agriculture and allied activities in 2024-25.

"This marks an improvement vis-a-vis growth of about 1.4 per cent reported in the year 2023-24. Ebbing El Nino effects with the expectation of a normal southwest monsoon are likely to bode well for agricultural production," said the industry body.

On the other hand, the industry and services sectors are expected to grow by 6.7 per cent and 7.4 per cent, respectively, in the current fiscal year. Additionally, the median forecast for CPI-based inflation stands at 4.5 per cent for 2023-24, with a range of 4.4 per cent to 5 per cent.

"While food prices remain sticky with inflation inching up in cereals, fruits and milk, the survey participants expect an easing of prices in the second quarter with kharif output reaching the market," it said.

According to economists, the policy repo rate is expected to decrease to 6 per cent by the end of the fiscal year 2024-25 (March 2025). Regarding fiscal management and expenditures, the economists noted that the government has adeptly managed the fiscal side.

"It is expected that such prudence will continue as it is important to ensure macro-economic stability. According to economists, the government has an opportunity to leverage additional resources from robust tax collections and Reserve Bank of India's dividend transfer," the report states.

Regarding capital expenditure, it was noted that while the target could increase, deviations from the interim budget figure of Rs 11.1 trillion for FY2025 were not expected.

Surveyed economists anticipated taxation reforms aimed at stimulating economic growth. "Potential revisions in tax rates to boost disposable income and stimulate consumption, particularly for lower income brackets, are anticipated," they commented.

Furthermore, it was suggested that raising limits under Section 80C and similar provisions could incentivise long-term savings and investment. The report also mentioned expectations for simplifying the capital gains tax regime and outlining a framework for streamlining GST slabs.

The economists indicated that the upcoming budget will likely introduce comprehensive measures to enhance employment and workforce capabilities. They highlighted suggestions such as introducing an employment-linked incentive scheme, establishing an urban version of the Mahatma Gandhi National Rural Employment Guarantee Act, increasing investments in labour skilling programs and soft infrastructure, and implementing targeted policies and support systems to boost female labour force participation.