In a recent forecast, the Confederation of Indian Industry (CII) anticipates a robust 8% growth in India's Gross Domestic Product (GDP) for the fiscal year 2024-25. This growth is underpinned by advancements in the agriculture and services sectors, coupled with increased public expenditure.
Sanjiv Puri, President of CII, highlighted that sustained momentum in public capital expenditure is poised to fortify both physical and digital infrastructure, laying a sturdy groundwork for economic expansion.
Agriculture is slated to witness a significant uptick, with a projected growth rate of 3.7%, marking a notable improvement from the preceding year's 1.4%. Similarly, the services sector is expected to surge by 9%, up from 7.9% in the previous fiscal year.
Conversely, the industrial sector's growth is forecasted to moderate slightly to 8.4%, marginally lower than the previous year's 9.3%, mainly attributed to a higher base effect.
Puri emphasized that various policy interventions aimed at facilitating ease of doing business have established a solid foundation for growth. Moreover, an anticipated uptick in global trade is poised to further bolster the economy. However, the forecast of above-normal monsoon rains introduces weather-related risks despite potential benefits to agricultural production.
Evident from rising sales of passenger vehicles and increased airline and rail traffic, robust domestic demand is a key driver. Public investment in physical infrastructure is estimated to rise to Rs 5.25 lakh crore, compared to Rs 5.06 lakh crore as quoted in the Union Budget.
To sustain this growth trajectory, CII has recommended a 25% increase in capital expenditure for FY25 over the revised estimate for FY24.
In addition to urging increased public spending, CII proposed a roadmap to elevate expenditure on education to 6% of GDP and on healthcare to 3%.
Regarding financial sector reforms, CII advocated for the privatization of public sector banks, diversification of funding sources for non-banking financial companies, and rationalization of tax deducted at source provisions. They suggested reducing the number of TDS rates and ensuring consistency in capital gains tax rates and holding periods across various financial instruments.
