New Delhi:�Industry body Ficci on Thursday lowered India's growth projection for the current financial year to 6.4 percent from 7 per cent estimated earlier. Sharing their perspective on the expected impact of US President Donald Trump's policies on the Indian economy, the economists indicated the possibility of short-term disruptions through channels like exports, foreign capital flows, and input costs for the US trading partners including India.
As the Union Budget for the financial year 2025-26, is set to be tabled in Parliament on February 1, the survey report flags concern over India's economy amidst global economic uncertainties and moderating domestic growth. Against this backdrop, economists shared their expectations in the survey that could shape the government's policy in the upcoming budget.
According to Ficci’s Economic Outlook Survey, the revised projection is in line with the broad expectations and reflects a notable slowdown vis-à-vis 8.2 per cent GDP growth recorded in 2023-24. “The report projects an annual median GDP growth forecast of 6.4 per cent for 2024-25. The forecast in the current survey marks a moderation from the 7.0 percent estimate (for 2024-25) put out in the previous round conducted during the month of September last year,” it said.
The survey was conducted in December 2024 and drew responses from leading economists representing the industry, banking and financial services sector. The participating economists observed the global economy in 2025 to present a reasonable growth trajectory, with an underlying note of caution. “The likelihood of tax cuts (personal and business) could inflate the US fiscal deficit, while higher tariffs and stricter immigration norms could push up labour costs and inflation,” they observed.
The Federal Reserve, in response, could cut the policy rates by less than what was anticipated. This may reduce capital inflows into emerging markets, including India, causing rupee fluctuations. “Trade tensions, including a potential US-China trade conflict, could disrupt supply chains and raise input costs in the short term. “However, economists expect the US to take a calibrated approach towards India,” the economists opined.
“Reviving the private consumption in the country emerged as a key priority. A review of the current tax structure including rates (both direct and indirect taxes) in the Union Budget 2025-26 is called for with a view to enhance disposable income and stimulate consumer spending. Additionally, continued investments in welfare programmes such as MGNREGA, PMGSY, and PMAY were recommended. Further, continued capex expansion is the need of the hour. An increase between 10-15 per cent in capex over 2024-25 is being looked at in the upcoming budget,” the economists said.
They also recommended initiatives to increase agriculture productivity, improve rural infrastructure, and strengthen agricultural value chains. Investments in cold storage facilities and supply chain efficiency were underscored as critical to managing inflationary pressures and minimising food wastage. “India's economic outlook for 2025 presents cautious optimism, amidst the backdrop of persisting external Headwinds,” they said.
Consumer spending, they said, is expected to gain momentum, driven by an improved outlook for the agriculture sector, which is likely to bolster rural consumption and sentiment in the first half of the next fiscal year. “Food inflation, which has remained elevated for over a year and strained household budgets, is expected to ease. Besides, monetary easing by the RBI, resulting in lower interest rates, could also provide an additional impetus to consumption,” they added.�
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