India’s Economic Survey 2024-25

Introduction

The Economic Survey 2024-25, which lays out a plan for development and reforms and prepares the ground for the Union Budget 2025, was presented to Parliament by Finance Minister Nirmala Sitharaman.

What is Economic Survey?

• In order to evaluate India’s economic situation, the government presents the Economic Survey every year before to the Union Budget.
• Under the direction of the Chief Economic Adviser, the Ministry of Finance’s Economic Division prepared it, and the Union Finance Minister presents it to both chambers of Parliament.
• The study evaluates economic performance, identifies sectoral advancements, describes obstacles, and offers a forecast for the economy for the upcoming year.
• The Economic Survey was initially included in the budget in 1950–51. In 1964, it was tabled one day ahead of the budget and became a separate document from the Union Budget.

What are the Highlights of the Economic Survey 2024-25?

State of the Economy

• Global Economy: The International Monetary Fund (IMF) predicted that global growth would be 3.2% in 2024 and 3.3% in 2025. Manufacturing would slow down as a result of supply chain disruptions, but services would continue to develop well. Global inflation decreased, but services inflation persisted, which caused central banks to adopt different monetary strategies.
• Geopolitical Uncertainties: The Israel-Hamas conflict and the Russia-Ukraine war have affected inflation, commerce, and energy security. Ships were compelled to detour via the Cape of Good Hope due to problems in the Suez Canal, which resulted in longer delivery times and higher freight prices.
• India’s Economy: In FY26 (2025–26), India’s GDP is expected to expand 6.3-6.8%, while real Gross Value Added (GVA) is expected to grow 6.4% in FY25 (2024–25).
  • Agriculture: record Kharif yield and robust rural demand drove a 3.8% growth in FY25.
  • Industry & Manufacturing: In FY25, industry and manufacturing grew by 6.2%, while manufacturing slowed as a result of sluggish global demand.
  • Services: At 7.2% in FY25, services grew at the fastest rate, with IT, finance, and hotel leading the way.
  • External Sector: External Sector: In the first nine months of FY25, total exports (merchandise + services) increased by 6% year over year. 11.6% in the services sector over the same period.

Monetary and Financial Sector Developments

With net non-performing assets (NPAs) at 0.6%, Scheduled Commercial Banks’ (SCBs’) gross non-performing assets (GNPA) fell to a 12-year low of 2.6% in 2024.

• The Return on Equity (RoE) improved to 14.1% while the Return on Assets (RoA) increased to 1.4% (Sep 2024).
• With the help of Regional Rural Banks (RRBs), the Reserve Bank of India’s (RBI) Financial Inclusion Index rose from 53.9 in 2021 to 64.2 in 2024.
• The RBI injected Rs 1.16 lakh crore into the economy by lowering the CRR to 4% and keeping the repo rate at 6.5%.
• As a result of greater liquidity, the money multiplier climbed to 5.7.
• In primary markets, capital markets raised Rs 11.1 lakh crore between April and December 2024, a 5% increase over FY24. Fundraising through Initial Public Offerings (IPO) increased thrice to Rs 1.53 lakh crore.
• Infrastructure projects were funded by Development Financial Institutions (DFIs), such as the National Bank for Financing Infrastructure and Development (NaBFID) and the India Infrastructure Finance Company Limited (IIFCL). NaBFID approved loans of Rs 1.3 lakh crore.

External Sector

The foreign sector of India stayed strong. With a 6% increase, total exports (including commodities and services) came to USD 602.6 billion.

• Due to strong local demand, imports also rose 6.9% to USD 682.2 billion.
• Rising trade policy uncertainty and delays in important shipping routes, such the Red Sea and the Panama Canal drought, made global trade difficult and resulted in longer delivery times and higher costs.
• As nations emphasized commerce inside geopolitical alliances, a movement toward friend-shoring and near-shoring was seen.
• Foreign Portfolio Investments (FPIs): Despite fluctuations brought on by international unpredictability, India’s solid economic foundation maintained healthy inflows overall.
• With foreign exchange reserves of USD 640.3 billion as of December 2024, which covers 90% of the external debt (USD 711.8 billion as of September 2024), macroeconomic stability and shock resistance are guaranteed.

Prices and Inflation

• Due to supply chain disruptions, inflation reached a peak of 8.7% in 2022. However, monetary tightening caused inflation to decline to 5.7% in 2024.
• Despite efforts to stabilize prices, food inflation increased from 7.5% to 8.4%, led by vegetables (tomatoes, onions) and pulses, while retail inflation decreased from 5.4% in FY24 to 4.9% in FY25.
• The volatility of the Consumer Price Index (CPI) remained high due to supply chain problems and weather interruptions.
• With falling service and fuel price inflation, core inflation reached a 10-year low.
• The IMF predicts 4.4% inflation in FY25 and 4.1% inflation in FY26, assuming stable conditions, whereas the RBI updated FY25 inflation from 4.5% to 4.8% with an expectation of 4.2% in FY26.

Medium-Term Outlook

• With a nominal GDP growth rate of 10.2% (FY25-FY30), the IMF predicts that India’s economy would reach USD 5 trillion by FY28 and USD 6.3 trillion by FY30.
• India has to expand at a rate of 8% per year over the next 20 years in order to meet its Viksit Bharat 2047 target.
• However, supply chains and investment flows are at danger from global issues including trade limitations, geoeconomic fragmentation, and China’s hegemony in the manufacturing and energy transition sectors.
• According to the IMF, India’s real GDP would grow by 6.5% a year between FY26 and FY30, and by FY30, the CAD is predicted to increase to 2.2% of GDP.
• A modest 0.5% annual depreciation of the rupee is anticipated, signifying greater economic stability than in prior decades.

Medium-Term Outlook

• With a nominal GDP growth rate of 10.2% (FY25-FY30), the IMF predicts that India’s economy would reach USD 5 trillion by FY28 and USD 6.3 trillion by FY30.
• India has to expand at a rate of 8% per year over the next 20 years in order to meet its Viksit Bharat 2047 target.
• However, supply chains and investment flows are at danger from global issues including trade limitations, geoeconomic fragmentation, and China’s hegemony in the manufacturing and energy transition sectors.
• According to the IMF, India’s real GDP would grow by 6.5% a year between FY26 and FY30, and by FY30, the CAD is predicted to increase to 2.2% of GDP.
• A modest 0.5% annual depreciation of the rupee is anticipated, signifying greater economic stability than in prior decades.

Industry & Manufacturing

• According to preliminary advance projections, the industrial sector is anticipated to expand by 6.2% in FY-25, mostly due to strong development in the construction and electricity sectors.
• The government has been aggressively supporting the creation of SAMARTH Udyog centers and advancing Industry 4.0 and Smart Manufacturing.
• Important industries experienced development, with electronics manufacturing exceeding Rs 9.52 lakh crore and steel production up 3.3% (April–November FY25). With 99% of cellphones produced locally, India’s reliance on imports was significantly reduced.
• India is sixth out of the top 10 patent filing offices in the world, according to the WIPO Report 2022, and resident filings make up more than half of all submissions (55.2%), which is a first for the nation.
• With 2.39 crore enterprises officially recognized under Udyam Assist, the MSME sector employs 23.24 crore people.

Services

• Increasing from 50.6% in FY14 to 55% in FY25, India’s services industry employs 30% of the country’s workforce and propels industrial expansion through servicification.
• India exports 4.3% of the world’s services, placing it seventh overall.
• The GVA share of information and computer-related services increased from 6.3% to 10.9% at a 12.8% CAGR from FY13 to FY23.
• In FY24, railway passenger traffic climbed by 8% while freight transit increased by 5.2%.
• Real estate sales reached an 11-year high in H1 FY25, and tourism recovered, accounting for 5% of GDP in FY23.
• With 1.18 billion users, the telecom industry consumes the most mobile data worldwide.

Agriculture and Food Management

• With 5% yearly growth (FY17-FY23) and 46.1% of the workforce employed, India’s agriculture industry accounts for 16% of GDP (FY24).
• Production of Kharif foodgrains reached 1,647 LMT (2024), up 89.37 LMT YoY, while conventional farming was surpassed by fisheries (184 LMT) and livestock (CAGR 12.99%).
• To guarantee farmer profitability, the Minimum Support Price for Arhar and Bajra was raised by 59% and 77%, respectively (FY25).
• Two-thirds of India’s cropland is at serious risk of drought, while 55% of the country’s net planted area is irrigated.
• There are 7.75 crore Kisan Credit Cards (KCC) accounts.
• In FY24, 4 crore farmers participated in the PM Fasal Bima Yojana (Crop Insurance), which covered 600 LMT hectares.
• In October 2024, the e-NAM platform connected 2.62 lakh dealers and 1.78 crore farmers to improve price discovery.

Social Sector

• Spending on the social sector in India increased at a 15% CAGR from FY21 to FY25, reaching Rs 25.7 lakh billion.
• In rural regions, the Gini coefficient decreased from 0.266 in 2022–2023 to 0.237 in 2023–2024; in urban areas, it decreased from 0.314 in 2022–2023 to 0.284 in 2023–2024.
• Education and Skill Development: While enrollment in higher education climbed 26.5% between 2014 and 2022, bringing the Gross Enrollment Ratio (GER) to 28.4%, education spending increased 12% CAGR to Rs 9.2 lakh crore, lowering dropout rates to 1.9% for elementary school and 14.1% for secondary school.
• Social Security and Healthcare: Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) reduced medical costs by Rs 1.25 lakh crore, although healthcare spending increased by 18% to Rs 6.1 lakh crore.

What are India’s Economic Challenges According to the  Economic Survey 2024-25?

Global

• Geopolitical Risks: Supply chains, energy costs, and trade are all impacted by conflicts like the Russia-Ukraine war and the Red Sea interruptions.
• Global Trade Slowdown: India’s export competitiveness is impacted by supply chain realignments and protectionism.
• Financial Market Volatility: Changes in interest rates in the US and the EU might lead to capital flight, which would affect India’s foreign exchange reserves and currency stability.

Inflation

• Persistent Food Inflation: Despite steady core inflation, generate inflationary pressures.
• Climate Impact: Extreme weather occurrences, such as droughts and unpredictable monsoons, have an impact on agricultural revenues and food security.

Employment & Skilling Gaps

• Jobless Growth Concerns: The concentration on high-skill, low-employment industries, early deindustrialization, and skill mismatches are the main causes of India’s unemployment problem, where economic development is outpacing job creation.
• Low LFPR: India’s female LFPR is 41.7% (FY25), which is still below than the worldwide average of more than 50%.

Fiscal & Financial Sector Risks

• Due to growing subsidies, slow income growth, and reliance on central transfers, some governments are heavily indebted.
• Fintech lenders and NBFCs face increased risks associated with unsecured lending, which calls for more oversight and regulation. Cyber dangers also persist.
• Even while digital lending is growing, small company expansion is hampered by the slow credit penetration to MSMEs.

Conclusion

The Economic Survey 2024-25 outlines a robust path forward for India’s economy, emphasizing resilience amidst global uncertainties. With promising growth projections across sectors like agriculture, industry, and services, coupled with strategic financial reforms, India aims to sustain momentum towards achieving long-term economic stability and inclusive growth.

Frequently Asked Questions(FAQs)

Sources:

• https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf
• https://pib.gov.in/PressReleasePage.aspx?PRID=2097921
• https://www.indiabudget.gov.in/economicsurvey/doc/Infographics%20English.pdf
• https://en.wikipedia.org/wiki/Economic_survey_of_India#:~:text=The%20Economic%20Survey%20of%20India,just%20before%20the%20Union%20Budget.
• https://www.thehindu.com/business/budget/economic-survey-2024-2025-highlights-key-takeaways/article69158118.ece
• https://economictimes.indiatimes.com/news/economy/policy/economic-survey-2025-highlights-union-budget-check-the-key-pointer-indian-economy-growth-review-fiscal-deficit-income-tax-middle-class/articleshow/117773955.cms?from=mdr
• https://indianexpress.com/article/business/economic-survey-india-gdp-9809620/
• https://www.moneycontrol.com/news/business/economic-survey-2025-live-updates-nirmala-sitharaman-india-economy-gdp-growth-cea-v-anantha-nageswaran-speech-liveblog-12924859.html