India’s GDP To Grow 6.8% This Year, Fourth Largest Economy By 2026: PHD Chamber
With the Indian economy growing resiliently over the past three years, it is expected to become the fourth largest economy in the world by 2026, surpassing Japan, said Hemant Jain, President, PHD Chamber of Commerce and Industry.
India's economy is expected to become the fourth largest in the world by 2026, surpassing Japan, said industry body PHD Chamber of Commerce and Industry on Wednesday, as it projected the nation's GDP to grow 6.8% in the current financial year ending March and 7.7% in fiscal 2025-26.
With the Indian economy growing resiliently over the past three years, it is expected to become the fourth largest economy in the world by 2026, surpassing Japan, said Hemant Jain, President, PHD Chamber of Commerce and Industry.
Ahead of the Budget, the industry chamber also said the peak rate of income tax, which is currently applicable at 30% on income above Rs 15 lakh, should be applied only to individuals having income above Rs 40 lakh, whereas the income tax exemption limit should be increased to Rs 10 lakh, arguing that boosting consumption through more disposable income in the hands of people is essential.
Besides, the PHDCCI expects the Reserve Bank to slash the bench-mark interest rate by 25 basis points in its policy review next month, with the Consumer Price Index or CPI inflation expected to reduce significantly.
"We are expecting in the next policy that there must be a 25 basis point cut technically, because now our CPI inflation is coming down, though some food prices are still high because of some hurdles, because of fog or the lingered monsoon scenario. But we are expecting that in the coming quarters, CPI inflation should come down significantly to the level of somewhere between 4 to 2.5%," PHDCCI Deputy Secretary General S P Sharma said told in a press conference here.
Responding to a query regarding the measures suggested by the chamber to boost consumption through higher disposable income in the Budget, he said, "Rs 15 lakh, that is the middle income, and we are imposing the peak tax rate if you go by the advanced economies numbers ... So we have suggested that this peak rate must be imposed at least at the income of more than Rs 40 lakh. There should not be any peak rate on such kind of middle incomes, and peak rate should not be more than 25% if we are, we are a consumption economy."
Moreover, PHDCCI has suggested that the tax rate on entities under proprietorship or partnership and LLP, which is currently 33%, should be 25%.
In a statement, the chamber said the Indian economy stands as a beacon of resilience amidst the background of global volatility and challenges.
"While many of the world's leading economies are grappling with slowing growth, India has demonstrated remarkable progress, fuelled by solid macroeconomic fundamentals and proactive government reforms," it stated.
By enhancing business efficiency and fostering an investment-friendly climate, the country has attracted global attention as an attractive investment destination. PHDCCI projects GDP in the current financial year (fiscal 2024-25) to grow at 6.8% and 7.7% in fiscal 2025-26, the industry body said.
Projecting that the inflation trajectory is expected to be around 4.5% for the current fiscal year (fiscal 2024-25), PHDCCI said, looking ahead, India should focus on promising sectors such as agriculture and food processing, fintech, semi-conductor, renewable energy, health and insurance, and a commitment to sustainable development.
"Last but not least, we suggest a five-pronged comprehensive strategy, including increased capital expenditure, enhanced ease of doing business, reduction in the cost of doing business, focus on labour-intensive manufacturing and greater integration in global value chains, to lead India's growth trajectory to higher growth in the coming years," said the industry body.
