The Economic Survey 2024-25 prepared by a team of economists led by Chief Economic Adviser Anantha Nageswaran provides comprehensive analysis of India's economic performance over past year highlighting growth prospects, policy reforms & challenges faced by various sectors. Prepared by Department of Economic Affairs & Ministry of Finance survey serves as crucial document guiding economic policies & Union Budget.

1. Growth & Economic Outlook

• India's GDP growthis projected at 4% for FY25 with expectations of 6.3% to 6.8% for FY26.
• IMF projects India to be a $5 trillion economy by FY28& $6.3 trillion by FY30 with a nominal growth rate of 10.2% in USD terms.
• Private Final Consumption Expenditure (PFCE)is expected to grow by 7.3% in FY25 with its share in GDP increasing to 8% highest since FY03.
• Gross Fixed Capital Formation (GFCF)is estimated to grow 4% in FY25 driven by increased infrastructure spending.

2. Inflation & Price Trends

• Retail inflationdeclined to 9% (April-Dec FY25) from 5.4% in FY24 driven by a 0.9 percentage point reduction in core inflation.
• Food inflationrose to 4% (April-Dec FY25) from 7.5% in FY24 primarily due to higher vegetable & pulse prices.
• Excluding tomato, onion & potato (TOP)from Consumer Price Index (CPI) average food inflation would be 5% lower than actual rate.
• Reserve Bank of India (RBI) revised its inflation projection to 4.8% for FY25.

3. Fiscal Developments

• The fiscal deficit target for FY25 is 5.8% of GDP aiming for 5% by FY26.
• Gross Tax Revenue (GTR) grew by 10.7% YoY (April-Nov 2024) supported by increased GST collections.
• Capital expenditureon defence, railways & road transport accounted for 75% of total CapEx.
• States' fiscal positions have improved with increased devolution of tax revenues enhancing their spending capacity.

4. External Sector & Trade

• India’s total exports (merchandise + services) reached $602.6 billion growing at 6% in FY25.
• Gross FDI inflows grew by 17.9% YoY (April-Nov FY25) from $47.2 billion to $55.6 billion.
• Net FDI inflows stood at $0.48 billion (April-Nov FY25) declining from $8.5 billion in FY24 due to higher repatriation of investments.
• Foreign exchange reserves stood at $640.3 billion (Dec 2024) covering 90% of India’s external debt.

 

5. Investment & Infrastructure

• Union capital expenditure grew by 46% YoYfrom April to Nov FY25 focusing on transport, energy & public distribution.
• Production-Linked Incentive schemescontinue to drive manufacturing in key sectors like electronics, automobiles & pharmaceuticals.
• Road & rail infrastructure spendingsaw a significant boost post-elections.

6. Agriculture & Food Security

• Agriculture contributes 16% of GDP employing 1% of population.
• Kharif foodgrain production for 2024 is estimated at 164.7 million tonnes6 million tonnes above the average.
• Minimum Support Price for Arhar & Bajrawas raised by 59% & 77% respectively over production costs.
• Micro-irrigation coverage tripled in the last 8 years improving productivity & water efficiency.

7. Services Sector

• India's IT & financial services remain dominant globally with services FDI inflows at 19.1%.
• Tourism & hospitality rebounded supported by government incentives & increased domestic travel.
• E-commerce & logistics continued double-digit growth driven by digital payments & expanding supply chains.

8. Climate & Sustainability

• India’s renewable energy capacitycontinues to expand targeting net-zero emissions by 2070.
• China controls 80% of global battery manufacturing & 70% of rare earth processing creating supply chain risks for India's energy transition.
• Green hydrogen & electric mobility initiativesare gaining traction with significant investment in domestic production & R&D.

9. Education & Skill Development

• NIPUN Bharat Initiative launched in 2021 aims to achieve universal foundational literacy & numeracy (FLN) by 2026-27.
• Mission Ankur (Madhya Pradesh) & Mission Daksh (Bihar)provide peer teaching & mentoring for lagging students.
• Navchetana & Aadharshila frameworks introduced in 2024focus on early childhood education & skill development.

10. Labour Market & Employment

• Labour reforms have improved ease of doing business creating a "virtuous cycle of job creation".
• Rural demand is set to strengthen driven by an agricultural rebound & easing inflation.
• High electricity costs in India compared to Vietnam & Bangladeshimpact business competitiveness requiring policy interventions.

11. Artificial Intelligence & Future Trends

• India needs to revisit AI regulatory frameworksto balance innovation with accountability & data privacy concerns.
• AI adoption is transforming industries with a focus on skilling & regulatory frameworks.

12. Stock Market & Capital Flows13. Challenges & Risks

• India led global IPO listings in 2024 with a 30% share up from 17% in 2023.
• India’s weight in the MSCI-EM index rose to 19.4% ranking third after China & Taiwan.
• The Nifty 50 delivered a compounded annual return of 8.8% over the past decade outperforming China’s Shanghai Composite Index (3.2%).

13. Challenges & Risks

• Global Trade Disruptions: Increasing protectionism, supply chain disruptions & trade tensions particularly with China's dominance in key raw materials pose risks to India's export sector.
• Inflationary Pressures: Despite moderation food & energy price volatility remain concerns especially in wake of climate-related disruptions.
• Geopolitical Uncertainty: Global conflicts & economic sanctions could impact foreign investments & capital flows.
• Fiscal Sustainability: While the fiscal deficit is improving maintaining expenditure efficiency & revenue growth is critical to long-term stability.
• Employment Mismatch: Skill gaps persist despite educational reforms necessitating stronger industry-academia collaboration.
• Energy Transition Dependence: India’s reliance on external sources for critical minerals in renewable energy & electric mobility might have negative effect on efforts to be self sufficient.

Conclusion

• India’s economic outlook remains positive supported by high capital expenditure, stable banking & strong policy measures.
• Key risks include global trade tensions, inflationary pressures & financial market volatility.
• Structural reforms in agriculture, exports & digital infrastructure will be critical for long-term growth.
• To become "Viksit Bharat" by 2047 India must sustain 8% growth for the next two decades.

References

• Economic Survey 2024-25, Department of Economic Affairs, Ministry of Finance, Government of India.