Apex industry body Confederation of Indian Industry (CII) sees India’s economic growth in 2024-25 record a robust 8 per cent, its new President Sanjiv Puri has said.
This forecast is much higher than the Reserve Bank of India’s forecast of 7.2 per cent GDP growth for current fiscal.
The industry body’s growth optimism comes on the back of expectations of the new Modi-led NDA Government implementing second generation reforms in a mission mode and also global trade growth rates improving in the next couple of years.
“Last year was a great year. Every estimate that was made on the economy for last year was beaten including the one made by CII. But we believe the best is yet to come and we are more optimistic this fiscal at 8 per cent than all the estimates that have come from agencies both within and outside the country,” Puri said in his first media interaction after assuming charge as CII President in May this year.
Elaborating on the rationale behind such a growth optimism, Puri said the country has been placed on a strong foundation by government’s policy interventions on ease of doing business. “The Government has put the economy on a much stronger wicket today and we have started the current year with robust high frequency indicators,” he said.
Going forward, Puri said he expects certain facets improving such as monsoons (agricultural production will be better) and global trade is expected to be better in coming year leading to better IT sector performance in latter part of this year.
“There are many positives going in. That is why we believe 8 per cent is potential growth rate. We are also expecting all three segments of agriculture, industry and services to be firing on all cylinders,” Puri said.
For 2024-25, CII expects agricultural growth at 3.7 per cent (1.4 per cent); industry at 8.4 per cent (9.3 per cent) and services at 9 per cent (7.9 per cent).
Another reason for CII’s growth optimism for current fiscal is that inflation rate will be closer to RBI target of 4 per cent and be around 4.5 per cent. “The data available suggests that weather situation is going to be much more favourable than in the past in terms of rainfall, etc. This actually correlates with how agriculture sector performs. While weather remains a risk and is unpredictable, available data suggests that weather is going to be much better and that agriculture sector is going to do well,” Puri said.
Puri highlighted that Indian economy took over a decade to double its GDP from $ 1.7 trillion in 2010-11 to $3.4 trillion in 2022-23. The next doubling of GDP will take place in shorter span of time, in 7 years and Indian economy is poised to touch $7 trillion by 2029-30, he added.
Puri outlined a 14-point agenda for the new government for driving the next phase of economic transformation.
CII has identified ‘“Globally Competitive India: Partnerships for Sustainable and Inclusive Growth” as its Theme for 2024-25.
The key drivers supporting India’s growth acceleration include private sector investments partaking in the growth story. public investments in physical and digital infrastructure; well capitalised banking system; reduced dependence on oil (oil intensity of GDP has fallen sharply over last decade) and geo-economic conditions favouring India’s ascent.
Many of the next generation reforms lie in the State and concurrent domains and require tough consensus building to take them forward. Inter-State Institutional platforms on the lines of GST Council can be created, Puri added.
CAPEX PUSH
Puri said that CII expects Centre’s thrust on public infrastructure capex to continue in the upcoming Budget.
“Government must continue with its capex led growth strategy along with fiscal consolidation. Part of the windfall dividend of ₹2.1-lakh crore from RBI, could be used to increase capital expenditure by 25 per cent in FY25 from the RE figure of ₹9.5-lakh crore for FY24,” he said.
Puri noted that private investments is in the right trajectory and is now more than pre-Covid levels.
TAX REFORMS
On direct taxes side, Puri called for continued simplification and moderation in corporate tax rates. He also suggested rationalisation of TDS provisions by reducing the number of rates and having a small negative list.
Puri stressed the need to rationalise capital gains tax by bringing consistency in tax rates and holding period for different types of instruments.
In the case of indirect taxes, the CII President suggested bringing GST under a three-rate structure with moderation of rates. There is need to bring petroleum products, electricity and real estate under GST, he added.