January 14, 2025
India is projected to surpass Japan and emerge as the fourth-largest global economy by 2026, with GDP growth rates of 6.8% in FY24 and 7.7% in FY26
PHDCCI recommends raising the income tax exemption limit to INR 10 lakh and applying the peak tax rate of 30% only to incomes above INR 40 lakh
The chamber anticipates a 25 basis point interest rate cut in the Reserve Bank's next policy review, as CPI inflation is projected to drop to 2.5-4% in the coming quarters
Proposed reforms include reducing tax rates for proprietorships, partnerships, and LLPs from 33% to 25%, boosting business efficiency and investments
India is on track to become the fourth-largest global economy by 2026, surpassing Japan, according to projections by the PHD Chamber of Commerce and Industry (PHDCCI). The chamber has forecast GDP growth rates of 6.8% for FY24 and 7.7% for FY26, reflecting the resilience of the Indian economy amid global challenges.
Highlighting the need for higher consumption to sustain growth, PHDCCI suggested raising the income tax exemption limit to INR 10 lakh and applying the peak tax rate of 30% only to incomes exceeding INR 40 lakh. Additionally, the chamber advocated reducing tax rates for entities under proprietorship, partnerships, and LLPs from the current 33% to 25%, arguing that such reforms would enhance business efficiency and disposable income.
With CPI inflation expected to decline to 2.5-4% in the coming quarters, the chamber anticipates a 25 basis point reduction in benchmark interest rates in the Reserve Bank’s upcoming policy review. Deputy Secretary General S P Sharma noted that food price volatility, influenced by weather disruptions, remains a concern but is expected to stabilise.
The industry body emphasised the importance of promising sectors such as agriculture, food processing, fintech, renewable energy, and semiconductors in sustaining India’s growth trajectory. It underscored the need to commit to sustainable development to attract global investments and ensure long-term progress.
To accelerate growth, PHDCCI proposed a comprehensive five-pronged strategy, including increased capital expenditure, enhanced ease of doing business, reduced business costs, focused on labour-intensive manufacturing, and greater integration into global value chains.
The chamber commended the government’s proactive reforms and strong macroeconomic fundamentals, which have positioned India as a resilient and attractive investment destination. By fostering an investment-friendly climate and addressing key challenges, India will maintain its economic momentum and secure its place among the world’s leading economies.
Source: Times of India