Fourth-largest-Economy Ahead: India Projects 6.8% Growth, Eyes FY26 Target of 7.7%

NEW DELHI, Jan 15 : In a promising forecast on the nation's economic trajectory, the PHD Chamber of Commerce and Industry (PHDCCI) on Wednesday said India is likely to become the world's fourth-largest economy by 2026, surpassing Japan.

As per the industry body's projections, the country's Gross Domestic Product (GDP) is expected to grow at a robust 6.8 percent in the current financial year ending March and reach 7.7 percent in FY26 - outpacing Japan's growth prospects in the same period.

According to Hemant Jain, President of PHDCCI, India has demonstrated remarkable resilience over the past three years, solidifying its position as a beacon of economic strength amidst global volatility and challenges.

Ahead of the upcoming Budget Session, PHDCCI released several recommendations aimed at boosting consumption, cutting income tax brackets, and slashing interest rates. The industry body suggested that the peak rate of income tax be applied only to individuals with incomes above Rs 40 lakh, while increasing the income tax exemption limit from the current Rs 15 lakh to Rs 10 lakh.

Enhancing disposable income is crucial for stimulating consumption in India, according to PHDCCI's Deputy Secretary General S P Sharma. "We believe that having a lower peak rate of income tax will boost consumption. Most middle-income households pay around 30 per cent, so we suggest this peak rate only applies to individuals with incomes above Rs 40 lakh," he said.

Moreover, the PHDCCI expects the Reserve Bank to slash benchmark interest rates by 25 basis points in its next policy review, due by the end of January. The Consumer Price Index (CPI) inflation is expected to decline significantly, falling below 4-2.5 per cent.

"We are expecting a 25 basis point cut technically, as our CPI inflation is coming down," said Sharma during a press conference held in New Delhi.

To bolster the low-income segment of society and increase disposable income, PHDCCI proposed suggestions including:

• Cutting peak rate of income tax to 25% for higher income households above Rs 40 lakh
• Increasing income tax exemption limit from Rs 15 lakh to Rs 10 lakh
• Lowering taxation rates on entities under proprietorship or partnership/LLP to 25 percentage

By implementing these measures, PHDCCI aims to create an investment-friendly climate and promote growth, solidifying India's position as a global economic powerhouse.