GDP to grow by 8% in FY25 in agriculture, services growth: CII

New Delhi: The Confederation of Indian Industry expects India’s GDP to grow by 8% in FY25, driven by recovery in agriculture and services sectors and increase in public expenditure, among others.

“The strong momentum in public capital spending is likely to support both physical and digital infrastructure,” said CII president Sanjiv Puri.

According to the industry body, the agriculture sector is likely to register a growth of 3.7% in the current financial year compared to 1.4% last year, while the services sector is likely to see a growth of 9% compared to 7.9% a year ago.

However, the industrial sector saw growth of 8.4% compared to 9.3%, mainly due to a higher base.
“We are more optimistic than all the reports and estimates presented by the agencies… Firstly, we realize that (India has) come to a very strong footing due to numerous policy interventions regarding ease of doing business and so on and so forth…” – Puri said. He added that there are many factors such as global trade, which is expected to be better in the current fiscal year. Puri said that given the good monsoon forecast, CPI inflation is estimated at 4.5% in the current fiscal. While the weather remains risky, rainfall is forecast to be above normal this year, which could lead to better agricultural production, Puri added. Domestic demand remains stable, as seen from indicators such as passenger vehicle sales, air and rail traffic , according to the industry body. Public investment in physical infrastructure is estimated at Rs 5.25 lakh crore as against Rs 5.06 lakh crore, CII said, citing the Union Budget.

The industry body has suggested the government to increase capital expenditure by 25% in FY25 over the revised estimate for FY24 as against a 16.8% increase in the Union interim budget in February. It also recommended the preparation of an action plan aimed at increasing public spending on education to 6% of GDP and health care to 3% of GDP.

Recommendations regarding financial sector reforms include the implementation of the announced privatization of public sector banks and the diversification of sources of financing for non-bank financial companies.

Rationalize withholding tax provisions by reducing the number of rates and introducing small negative schedule and capital gains tax by ensuring consistency in tax rates and holding period of different types of instruments, CII said in its suggestions.