GDP will grow 6.8% in FY25: PHDCCI

New Delhi: India's economy is expected to become the fourth largest in the world by 2026, surpassing Japan, said industry body PHDCCI on Wednesday, as it projected the nation's GDP to grow 6.8 per cent in the current financial year ending March and 7.7 per cent in FY26.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 per cent 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 PHD Chamber of Commerce and Industry (PHDCCI) expects the Reserve Bank to slash the bench-mark interest rate by 25 basis points in its policy review next month, with the 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 per cent," 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.