The Economic Survey 2024-25, presented on January 31, 2025, provides an in-depth review of India’s economic performance, challenges, and growth outlook. Serving as a prelude to the Union Budget 2025-26, it outlines key sectoral developments and the government’s focus on sustainable growth.
Economic Growth Projections
India’s real GDP growth for FY 2025-26 is projected between 6.3% and 6.8%, supported by strong economic fundamentals and a balanced fiscal approach. However, growth slowed to 5.4% in Q2 2024, reflecting weaker manufacturing output and consumer demand.
Key Insights:
- FY 2024-25 GDP Growth:
Estimated at 6.4%, marking a four-year low due to manufacturing and investment slowdowns. - Growth Drivers:
Private consumption, investment, and rural demand recovery are expected to boost growth. - External Factors:
Geopolitical tensions and global economic conditions may influence future performance. - Inflation:
Expected to remain stable, though vulnerable to external shocks. - Fiscal Deficit:
Targeted reduction to 4.3-4.4% of GDP for FY26. - Forex Reserves:
Improved reserves enhance macroeconomic stability.
Sectoral Developments
Manufacturing and Infrastructure
The survey highlights the need to revitalize manufacturing through increased investments. Infrastructure development remains a priority, with calls for sustained capital expenditure to support long-term growth.
Rural Development
Plans include expanding the Pradhan Mantri Awas Yojana (PMAY) to build 2 crore rural and 1 crore urban houses by FY 2029, with enhanced subsidies for economically weaker sections.
Digital Transformation
The digital economy is recognized as a key growth driver, with an emphasis on strengthening digital infrastructure to improve service delivery and economic inclusion.
Key Challenges
Stock Market Volatility: High valuations could lead to market corrections.
AI and Employment: Rising automation poses risks to low-skilled jobs.
Public Health: Increasing consumption of ultra-processed foods raises health concerns.
Insolvency Law: Delays in the Insolvency and Bankruptcy Code (IBC) process, especially for MSMEs, require attention.
Policy Recommendations
Public-Private Partnerships (P4): To accelerate housing and infrastructure projects.
AI Regulation: Establishing frameworks to manage risks in sectors like banking.
Health Policies: Stricter regulations on ultra-processed foods to address health risks.
Outlook for FY26
Despite current challenges, the survey projects a positive outlook for FY26, driven by strong domestic demand and strategic reforms. The government’s focus on fiscal discipline and targeted initiatives aims to foster sustainable growth.
In conclusion, the Economic Survey 2024-25 balances optimism with caution. It highlights India’s growth potential while addressing key risks, positioning the country to achieve its long-term development goals, including becoming a developed nation by 2047.