The latest FICCI Economic Outlook Survey, conducted in July 2024, presents a promising forecast for India’s economic landscape in the upcoming fiscal year. The survey projects India’s GDP to grow at a median rate of 7.0% for FY25, with estimates ranging from 6.6% to 7.5%. This projection reaffirms India’s position as one of the world’s fastest-growing economies, despite facing ongoing global and domestic challenges.

Agriculture Sector Recovery

One of the standout highlights from the survey is the anticipated robust recovery in agriculture and allied activities. The sector is forecasted to grow at 3.7% in FY25, a significant improvement from the 1.4% growth recorded in the previous fiscal year. This optimistic outlook is underpinned by several key factors:

Cessation of El Niño Effects: The adverse climatic conditions associated with El Niño, which had previously hampered agricultural productivity, are expected to subside.

Normal Monsoon Predictions: The India Meteorological Department (IMD) has forecasted a normal monsoon season, which is critical for kharif crop production.

These factors are anticipated to stabilize agricultural output, contributing positively to the overall economic growth.

Industry and Services Sector Projections

The survey provides detailed projections for the industry and services sectors, which are expected to grow at 6.7% and 7.4% respectively in FY25. Although these figures represent a decline from the previous fiscal’s growth rates of 9.5% for the industry and 7.6% for services, they still indicate robust sectoral performance.

Strong Investments: The growth in these sectors is supported by strong investments, driven by government capital expenditure and an increase in private investments. The government’s focus on infrastructure development and policy reforms aimed at enhancing the business environment play crucial roles in sustaining this growth momentum.

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Private Consumption Recovery: A recovery in private consumption is also expected, spurred by the rebound in agriculture and the easing of inflationary pressures.

Inflation and Monetary Policy

Inflation projections are a critical component of the economic outlook. The survey forecasts a CPI-based inflation rate of 4.5% for 2024–25, aligning closely with the Reserve Bank of India (RBI)’s monetary policy stance. This inflation rate suggests a relatively stable price environment, which is conducive to sustained economic growth.

Policy Repo Rate: Reflecting a cautious yet supportive monetary policy approach, the policy repo rate is anticipated to moderate to 6% by the end of the fiscal year. This moderation reflects the RBI’s strategic balancing act between fostering economic growth and keeping inflation within target levels.

Economic Insights and Expert Opinions

The FICCI Economic Outlook Survey derives its insights from leading economists across the industry, banking, and financial services sectors. These experts provide a comprehensive analysis of the current economic conditions and future prospects, incorporating both macroeconomic indicators and sector-specific trends.

The collective wisdom of these experts underscores the resilient nature of the Indian economy, capable of navigating through challenges while maintaining a steady growth trajectory. The projected GDP growth rate of 7.0% reflects a blend of strong domestic demand, policy support, and favorable external conditions.

Conclusion

In conclusion, the FICCI Economic Outlook Survey offers a positive and well-rounded forecast for the Indian economy in FY25. The projected 7.0% GDP growth, significant recovery in agriculture, stable industry and services sector growth, and manageable inflation all contribute to an optimistic economic outlook. As India continues to implement strategic policies and leverage its demographic advantages, it is well-positioned to sustain its rapid economic growth and further solidify its standing in the global economic arena.

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