HIGHLIGHTS OF ECONOMIC SURVEY 2024-25

 

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The Economic Survey 2024-25, presented by Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, provides a comprehensive overview of India’s economic performance, challenges, and future outlook.

State of the Economy 

GDP Growth: India’s real GDP growth is estimated at 6.4% in FY25, aligning with its decadal average. Real GVA (Gross Value Added) is also projected to grow at 6.4% in FY25. The growth is driven by structural reforms, improved infrastructure, and a resilient external sector.

Global Context: The global economy grew at 3.3% in 2023, with the IMF projecting an average growth of 3.2% over the next five years. India’s growth stands out, especially given global challenges like geopolitical tensions, trade policy risks, and ongoing conflicts.

Inflation: Retail inflation has softened from 5.4% in FY24 to 4.9% in April–December 2024, with RBI and IMF projecting it to align with the 4% target by FY26.

Capital Expenditure (CAPEX): CAPEX has shown consistent growth, with an 8.2% year-on-year increase during July–November 2024, reflecting the government’s focus on infrastructure development.

Exports Resilience: Non-petroleum and non-gems & jewellery exports grew by 9.1% during April–December 2024, showcasing India’s ability to withstand global volatility.

Monetary and Financial Sector Developments

Banking Sector Health: Credit growth has outpaced nominal GDP growth for two consecutive years, with the credit-GDP gap narrowing to -0.3% in Q1 FY25 from -10.3% in Q1 FY23. Gross NPAs of Scheduled Commercial Banks fell to a 12-year low of 2.6% in September 2024.

Insolvency Resolution: Under the Insolvency and Bankruptcy Code (IBC), ₹3.6 lakh crore was realized from the resolution of 1,068 plans, amounting to 161% of liquidation value and 86.1% of fair value.

Capital Markets: Indian stock markets outperformed emerging market peers, with total resource mobilization from primary markets reaching ₹11.1 lakh crore during April–December 2024, a 5% increase over FY24.

Insurance and Pension Growth: Total insurance premiums grew by 7.7% in FY24, reaching ₹11.2 lakh crore, while pension subscribers increased by 16% year-on-year as of September 2024.

External Sector 

Trade Performance: Overall exports (merchandise + services) grew by 6% year-on-year in the first nine months of FY25, with services exports surging by 11.6%. India ranks as the second-largest global exporter in ‘Telecommunications, Computer, & Information Services’, commanding a 10.2% market share.

FDI Revival: Gross FDI inflows increased by 17.9% year-on-year to USD 55.6 billion in the first eight months of FY25, up from USD 47.2 billion in the same period of FY24.

FOREX Reserves: India’s FOREX reserves stood at USD 640.3 billion as of December 2024, covering 10.9 months of imports and approximately 90% of external debt.

Prices and Inflation Dynamics

Global Inflation: Global inflation moderated to 5.7% in 2024 from its peak of 8.7% in 2022.

Retail Inflation in India: Retail inflation declined from 5.4% in FY24 to 4.9% in April–December 2024, with further alignment to the 4% target expected by FY26.

Agricultural Reforms: Development of climate-resilient crop varieties and enhanced farming practices are emphasized to mitigate the effects of extreme weather events and ensure long-term price stability.

Medium-Term Outlook 

Vision for Viksit Bharat: To achieve the vision of a developed India by 2047, the economy needs to grow at 8% annually over the next decade. This requires systematic deregulation, enhancing economic freedom, and empowering individuals and businesses.

Ease of Doing Business 2.0: The focus is on creating a robust SME sector, liberalizing standards, and reducing tariffs and fees at the state level.

Geo-Economic Fragmentation (GEF): The global shift from globalization to GEF necessitates realignments in trade and economic policies, with a focus on reducing dependency on China for energy transition and manufacturing.

Investment and Infrastructure Development

Public Spending: The Union Government’s capital expenditure on infrastructure grew by 38.8% from FY20 to FY24. Key achievements include:

• Construction of 5,853 km of National Highways in FY25 (April–December).

• Commissioning of 2,031 km of railway network and introduction of 17 new pairs of Vande Bharat trains.

• Renewable Energy: Renewable energy capacity increased by 15.8% year-on-year by December 2024, with renewables now accounting for 47% of total installed capacity.

• Digital and Social Infrastructure: Initiatives like Jal Jeevan Mission, Swachh Bharat Mission, and Pradhan Mantri Awas Yojana have significantly improved access to basic amenities. The rollout of 5G services and expansion of 4G connectivity to remote areas have also progressed.

Industrial and Services Sector Growth

Industrial Growth: The industrial sector is expected to grow by 6.2% in FY25, driven by electricity and construction. Smart manufacturing and Industry 4.0 initiatives are gaining traction, with 99% of smartphones now manufactured domestically.

Services Sector: The services sector’s contribution to GVA rose to 55.3% in FY25, with services exports growing by 12.8% during April–November FY25. India ranks seventh globally in services exports, with a 4.3% share.

Agriculture and Food Management

Agricultural Contribution: Agriculture contributes approximately 16% to GDP, with high-value sectors like horticulture, livestock, and fisheries driving growth.

Foodgrain Production: Kharif foodgrain production for 2024 is estimated at 1,647.05 lakh metric tonnes, an increase of 89.37 LMT from the previous year.

Food Security Initiatives: The National Food Security Act (NFSA) and PM Garib Kalyan Anna Yojana (PMGKAY) have ensured free food grains for millions, reflecting the government’s long-term commitment to food security.

Climate and Environment

Renewable Energy: India’s non-fossil fuel electricity generation capacity reached 2,13,701 megawatts as of November 2024, accounting for 46.8% of total capacity.

Lifestyle for Environment (LiFE): This India-led global movement aims to enhance sustainability efforts, with potential global savings of USD 440 billion by 2030 through reduced consumption.

Social Sector and Employment

Social Services Expenditure: Government spending on social services grew at a CAGR of 15% from FY21 to FY25, reducing inequality and improving health outcomes.

Employment Growth: The unemployment rate declined to 3.2% in 2023-24, with initiatives like the PM-Internship Scheme and EPFO payroll additions signaling healthy formal employment growth.

Labour in the AI Era 

AI’s Potential: AI is expected to automate economically valuable work, but India’s young, tech-savvy population positions it to leverage AI for productivity and innovation.

Augmented Intelligence: The future lies in integrating human and machine capabilities to enhance efficiency and job performance.

Policy Response: Collaborative efforts between the government, private sector, and academia are essential to mitigate adverse effects and harness AI’s potential.

Conclusion

The Economic Survey 2024-25 underscores India’s resilience and growth potential amidst global challenges. With a focus on deregulation, infrastructure development, and inclusive growth, India is well-positioned to achieve its vision of becoming a developed nation by 2047. The survey highlights the importance of leveraging technology, enhancing sustainability, and fostering innovation to drive long-term economic prosperity.