Economy: India to surpass Japan, become 4th largest economy in 2026, says PHDCCI
Virendra Pandit
New Delhi: The Punjab, Haryana, and Delhi Chamber of Commerce and Industry (PHDCCI) on Wednesday said India’s economy is expected to become the fourth largest in the world by 2026, surpassing Japan, as it projected the nation’s GDP to grow 6.8 percent in the current financial year ending March and 7.7 percent 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, according to Hemant Jain, President of the PHDCCI, the media reported.
Ahead of the upcoming Union Budget for FY26, he also said the peak rate of income tax, which is currently applicable at 30 percent on income above Rs 15 lakh, should be applied only to individuals with 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.
Also, the chamber expects the Reserve Bank of India to slash the benchmark interest rate by 25 basis points in its policy review next month, with the Consumer Price Index (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, although some food prices are still high because of some hurdles, ongoing fog, or the lingered monsoon scenario. However, we are expecting that in the coming quarters, CPI inflation should come down significantly to the level of somewhere between 4 to 2.5 percent,” PHDCCI Deputy Secretary-General S P Sharma told a press conference.
Asked about the industry body’s suggestions to boost consumption through higher disposable income in the upcoming 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 percent if we are a consumption economy.”
Also, PHDCCI has suggested that the tax rate on entities under proprietorship or partnership and LLP, which is currently 33 percent, should be 25 percent.
In a statement, it 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, India has attracted global attention as an investment destination. PHDCCI has projected GDP in FY25 to grow at 6.8 percent and 7.7 percent in FY26, the industry body said.
Projecting that the inflation trajectory is expected to be around 4.5 percent for FY25, 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.
“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 labor-intensive manufacturing, and greater integration in global value chains, to lead India’s growth trajectory to higher growth in the coming years,” it added.
