Economic Survey 2024-25 – I:  Resilient Growth Amid Global Uncertainty

Context

The Economic Survey is a flagship annual report released by the Ministry of Finance. It provides a detailed assessment of India's economic performance over the past year and outlines prospects for future growth. The survey serves as a policy guide, highlighting key macroeconomic indicators, investment trends, fiscal policies, and challenges that the Indian economy may face.

Why is the Economic Survey Important?

• It acts as a pre-budget document, providing insights that shape economic policies.
• It evaluates GDP growth, inflation trends, external trade, employment, and public finance.
• It offers recommendations to guide policymakers, businesses, and investors.
• Though not binding on the Union Budget, its findings are often considered in economic planning.

The Economic Survey 2024-25 was tabled in Parliament by Union Finance Minister Smt. Nirmala Sitharaman on the eve of the Union Budget 2024-25.

About the Economic Survey

1. Preparation & Presentation

• Prepared by: The Economic Division of the Department of Economic Affairs, under the supervision of the Chief Economic Advisor (CEA).
• Presented: A day before the Union Budget every year.
• First Survey: Conducted in 1950-51, initially presented along with the Budget until 1964.

2. Key Functions

• Provides a comprehensive analysis of India's economic trends.
• Identifies challenges and suggests policy measures.
• Serves as a foundation for economic debate and decision-making.

Key Highlights of the Economic Survey 2024-25

1. State of the Economy: Back on the Fast Track

GDP Growth Outlook

• Real GDP growth: Estimated at 6.4% in FY25, aligning with the decadal average.
• FY26 GDP growth projection: Between 6.3% - 6.8%, considering global and domestic risks.

Global & Domestic Challenges

• Global economy growth: 3.3% in 2023; projected 3.2% over the next five years (IMF).
• Challenges: Geopolitical tensions, trade disruptions, inflationary pressures affecting economic stability.

Inflation & Investment Trends

• Retail inflation: Dropped from 5.4% (FY24) to 4.9% (Apr-Dec 2024).
• Capital Expenditure (CAPEX): Continued growth with 8.2% YoY increase (Jul-Nov 2024).

Trade & Global Competitiveness

• India ranks 7th in global services exports.
• Non-Petroleum, Non-Gems & Jewellery exports: Grew by 9.1% (Apr-Dec 2024), showing resilience despite global uncertainties.

2. Monetary & Financial Sector: Stability & Growth

Banking Sector Performance

• Credit growth remains strong, aligning with deposit expansion.
• Gross Non-Performing Assets (GNPAs) at a 12-year low of 2.6%, reflecting improved asset quality.
• ₹3.6 lakh crore recovered under the Insolvency and Bankruptcy Code (IBC) (as of Sept 2024).

Stock Markets & Capital Mobilization

• Indian stock markets outperformed major emerging economies despite election-related volatility.
• BSE market cap-to-GDP ratio: 136%, higher than China (65%) and Brazil (37%).

Insurance & Pension Growth

• Insurance premiums: ₹11.2 lakh crore, with 7.7% growth (FY24).
• Pension subscribers: 16% YoY increase (Sept 2024).

3. External Sector: Resilient & Expanding

• Exports: 6% YoY growth (FY25); services exports surged 11.6%.
• India’s global rank: 2nd in Telecommunications, Computer & IT services exports (10.2% market share).
• Current Account Deficit (CAD): 1.2% of GDP (Q2 FY25), supported by strong net services exports and private transfers.
• FDI inflows: 17.9% increase, reaching USD 55.6 billion (Apr-Nov FY25).
• FOREX reserves: USD 640.3 billion (Dec 2024), covering 10.9 months of imports.

4. Prices & Inflation: Moderating Trends

• Global inflation decline: From 8.7% (2022) to 5.7% (2024) (IMF).
• India’s retail inflation: Fell from 5.4% (FY24) to 4.9% (FY25, Apr-Dec 2024).
• RBI & IMF projections: Inflation to align with 4% target by FY26.

5. Medium-Term Outlook: Growth Through Deregulation

• Geo-Economic Fragmentation (GEF): Global supply chains are being restructured, requiring policy adjustments.
• India needs ~8% annual GDP growth to achieve the Viksit Bharat 2047 vision.
• Key challenges:
  • China’s manufacturing dominance.
  • Energy transition dependencies.
  • Global economic fragmentation.
• Systematic deregulation and Ease of Doing Business 2.0 are critical for long-term growth.

6. Investment & Infrastructure: Sustaining Growth

• Public infrastructure investment: 38.8% CAPEX growth (FY20-FY24).
• Railways: 2031 km of new rail lines commissioned; 17 new Vande Bharat trains launched.
• Roads: 5,853 km of National Highways built in FY25 (Apr-Dec).
• Renewable energy: 47% of India’s installed capacity, with 15.8% YoY growth.
• Water & Sanitation: 12 crore families received piped water; 3.64 lakh villages declared ODF Plus.
• Urban Housing: 89 lakh houses completed under PMAY.
• Digital Expansion: 5G nationwide coverage; 4G extended to 10,700 remote villages.
• Space Vision 2047: 56 active space assets, including Gaganyaan & Chandrayaan-4.

Conclusion

The Economic Survey 2024-25 presents an optimistic yet pragmatic outlook for India's economy. With strong GDP growth, declining inflation, robust exports, and rising investment in infrastructure, India is on the path to sustainable economic expansion.

However, global uncertainties, energy transition challenges, and geopolitical risks demand continuous policy adjustments. The government’s focus on investment, infrastructure, deregulation, and innovation will be crucial in achieving India’s vision of Viksit Bharat 2047.

This Economic Survey lays the groundwork for policy discussions, economic reforms, and strategic planning in the coming years.