India to grow by 6.4 pc, and CPI inflation to settle at 4.8 pc in FY25: FICCI

India's economic outlook for 2025 presents cautious optimism with consumer spending expected to recover, aided by a positive outlook for agriculture and rural consumption, according to the latest Economic Outlook Survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Government-led investments in infrastructure, housing, and logistics are likely to drive growth. However, private capital expenditure is expected to remain subdued due to geopolitical uncertainties and uneven domestic demand.

The report also highlights potential opportunities in manufacturing, electronics, and pharmaceuticals as global supply chains diversify away from China. Economists stressed the importance of targeted policies to attract foreign direct investment and enhance India's manufacturing capabilities.

The survey, conducted in December 2024, attributes the economic moderation to global uncertainties and domestic challenges. The agriculture sector, including allied activities, is expected to grow at 3.6 per cent, while the industrial and services sectors are projected to expand by 6.3 per cent and 7.3 per cent, respectively.

Economic activity is likely to gain momentum in the second half of the fiscal year, supported by higher public capital expenditure, festive demand, and normalization of industrial activity post-monsoon.

The survey estimates the Consumer Price Index (CPI)-based inflation at 4.8 per cent for 2024-25, aligning with the Reserve Bank of India's (RBI) forecast in its December 2024 monetary policy. Food inflation, which has strained household budgets for over a year, is anticipated to ease, providing relief to consumers.

Economists participating in the survey highlighted the resilience of the global economy despite persistent uncertainties, noting uneven growth prospects across regions.

Factors such as softening inflation in advanced economies, easing monetary policies, and recovery in interest-sensitive sectors are expected to support growth. However, challenges like geopolitical tensions, trade uncertainties, and climate-induced disruptions continue to pose risks.

With the Union Budget 2025-26 set to be presented on February 1, economists emphasized the need to revive private consumption. They recommended reviewing tax structures to increase disposable income and stimulate demand. Continued investments in welfare programs like MGNREGA, PMGSY, and PMAY were also advised.

Increased capital expenditure, particularly in agriculture and rural infrastructure, was highlighted as critical for growth. Measures to improve supply chain efficiency, enhance cold storage capacity, and minimize food wastage were suggested to manage inflation and boost productivity.

Economists also discussed potential impacts of US trade policies and geopolitical tensions on India's economy. While short-term disruptions in exports and capital flows are anticipated, India could benefit from supply chain shifts and emerging opportunities in electronics and renewable energy sectors.

To strengthen resilience, the report recommends diversifying export markets, developing high-quality industrial clusters, and deepening collaboration in areas like artificial intelligence, clean energy, and cybersecurity. (ANI)