Indian economy projected to grow by 8% in FY25: CII president Sanjiv Puri

New Delhi: A GST council, like a federal body, could help in building consensus between the Centre and states over the next generation of reforms in key sectors such as agriculture, education, health and water, Confederation of Indian Industry (CII) president Sanjiv Puri said estimating Indian economy’s potential to achieve an 8% growth in FY25.

“According to CII estimates, the economy is poised to touch 8% growth during the current [fiscal] year, marking the fourth consecutive year of above 7%-plus growth,” he said. Puri, who is also chairman & managing director of ITC Ltd, took over as president of CII recently for a one-year term.

Puri said the Indian economy is on a higher growth trajectory and the estimate is achievable because of tailwinds such as a strong capex momentum, robust domestic demand, expectations of normal monsoon and global demand revival. “The country has, in the last few years, achieved both growth and economic stability through exceptional macroeconomic management despite unprecedented global challenges and this year would be no exception,” he added.

India is the fastest-growing major economy in the world. Officially, India’s GDP is projected to grow at 8.2% in 2023-24. The Reserve Bank of India (RBI) on June 8 revised India’s GDP growth estimate for FY25 to 7.2% from 7%. Puri’s optimism is, however, not without a cautionary note.

“India would have to stay vigilant against headwinds arising from global turbulence, higher for longer interest rates which may impact capital flows, rise in global commodity prices and extreme weather conditions,” Puri said.

Puri proposed some broad reform priorities for the finance minister, who is expected to present the full Union budget in the middle of the next month. His key recommendations are – higher capex while adhering to the fiscal consolidation roadmap, rural development with a focus on creating non-farm employment, improving manufacturing competitiveness, and providing funds for financing green growth.

Puri also emphasised the need to boost the rural economy. The government and industry could jointly create ‘Integrated Rural Development Hubs’ that may be both physical and digital, around clusters of villages which could provide agri-services as well as create jobs.

“To improve rural demand further, the government would do well to invest in rural infrastructure as well as encourage diversification of agriculture towards value-added crops such as horticulture, dairy and fishery to improve farmer income,” he said. Farmers should be incentivised to move beyond paddy and wheat. Puri said the capex allocation for boosting rural infrastructure in areas such as irrigation and cold storage warehouses, among others will also boost the sector and create agriculture service-related employment opportunities.

In addition, developing integrated rural industrial parks, especially in the vicinity of planned industrial corridors and smaller smart and planned cities, with first and last-mile connectivity to markets, can boost industrialisation in rural areas and help create additional employment opportunities, he added.

To provide a greater number of non-farm employment opportunities to the rural youth, the PM SVANidhi yojana, which provides working capital to street vendors, should be expanded to rural and semi-urban areas and should also be extended beyond December 2024, Puri said.

“Last but definitely not least, improving the health and education outcomes of the populace in both rural and urban areas by increasing outlays under the two heads would also play a critical role in upgrading the quality of the human capital, which would eventually contribute to more employable workforce feeding into demand as well,” Puri added.