KKN Gurugram Desk | Finance Minister Nirmala Sitharaman is set to present the Economic Survey 2024-25 in Parliament today, right after President Droupadi Murmu inaugurates the Budget Session for FY 2025-26 with an address to both Houses. This annual document serves as a crucial assessment of the Indian economy’s performance over the past year and lays down the roadmap for the upcoming fiscal year.
The Economic Survey, prepared by the Chief Economic Advisor (CEA) V. Anantha Nageswaran and his team, will offer insights into GDP growth projections, fiscal health, inflation trends, employment rates, and key economic policies influencing the nation’s financial landscape.
India’s Economic Growth Projections for 2025 and Beyond
At the start of 2024, India’s economy was projected to grow at an impressive 7%, making it one of the fastest-growing economies in the world. The nation has been on track to achieve a $4 trillion economy milestone in 2024-25, with aspirations to become the world’s third-largest economy by 2027.
However, as per early estimates, India’s GDP growth in FY 2024-25 is likely to be around 6.4%, marking a four-year low. This slowdown is attributed to weak manufacturing output and sluggish investments, according to data from the National Statistics Office (NSO).
For the upcoming fiscal year (FY 2025-26), the Economic Survey is expected to project GDP growth between 6.3% and 6.8%, signaling moderate economic expansion driven by private consumption, infrastructure investment, and policy reforms.
Key Highlights from the Economic Survey 2024-25
- GDP Growth Estimates:
- FY 2024-25: Estimated at 6.4%, down from the previous forecast of 6.5-7%.
- FY 2025-26: Expected to be in the range of 6.3-6.8%, according to government sources.
- Factors Driving Economic Growth:
- Strong private consumption and investment continue to be the backbone of India’s economic momentum.
- Robust infrastructure development and government policies supporting Make in India, Digital India, and Atmanirbhar Bharat initiatives.
- Resilient services sector, particularly in IT, e-commerce, and financial services, contributing to growth.
- Challenges Hindering Growth:
- Slow recovery in manufacturing and industrial output, affecting employment and exports.
- Global economic uncertainty, impacting trade and foreign direct investment (FDI).
- Inflationary pressures and a volatile rupee, which recently depreciated by 3 paise to 86.65 against the U.S. dollar ahead of the Economic Survey release.
Macroeconomic Indicators and Fiscal Health
India’s economic resilience has been a key driver for South Asia’s growth, as per a United Nations report, which indicates South Asia’s economic expansion is primarily fueled by India’s strong performance. However, to maintain stability, the government will need to focus on:
- Controlling inflation, which has remained a concern due to fluctuations in food and energy prices.
- Boosting exports, particularly in the manufacturing and technology sectors.
- Encouraging foreign investments, by implementing business-friendly policies.
- Strengthening the rupee, to prevent further depreciation against the U.S. dollar.
India’s Path to Becoming a $4 Trillion Economy
One of the key expectations from this Economic Survey is a detailed strategy for India to reach the $4 trillion GDP mark in the upcoming fiscal year. Some of the potential steps that the government may focus on include:
- Enhancing digital and financial inclusion through programs like UPI expansion, fintech innovations, and digital banking.
- Expanding manufacturing and exports with Production-Linked Incentive (PLI) schemes.
- Accelerating infrastructure projects, including highways, railways, and smart cities.
- Strengthening MSMEs and startups, which play a crucial role in job creation and economic expansion.
Global Perspective: How India Compares to Other Economies
India’s projected GDP growth of 6.4-6.8% remains significantly higher than many developed economies, which are witnessing slowdowns due to recessionary pressures. In contrast:
- The United States and Eurozone economies are expected to grow below 2% in 2025.
- China’s growth rate is slowing down, with estimates between 4-5%, giving India a competitive edge in the global economic landscape.
- South Asia’s overall economic growth is being driven largely by India’s strong domestic demand and policy reforms.
Stock Market and Investor Sentiment Ahead of the Budget 2025-26
With the Economic Survey laying the groundwork for the upcoming Union Budget 2025-26, market experts are closely watching Finance Minister Nirmala Sitharaman’s fiscal roadmap. Investors are particularly keen on:
- Government spending on infrastructure and social welfare programs.
- Tax reforms and potential GST revisions.
- Policies aimed at boosting foreign direct investments (FDI) and ease of doing business.
The Sensex and Nifty indices are expected to react to the survey’s findings, particularly regarding fiscal deficit targets and policy measures to revive manufacturing growth.
What’s Next? The Union Budget 2025-26
With the Economic Survey setting the stage, all eyes are now on the Union Budget 2025-26, which will be presented on February 1, 2025. Key areas of focus will include:
- Tax relief for middle-class citizens.
- Boosting employment opportunities in sectors like IT, manufacturing, and healthcare.
- Strengthening India’s digital economy and fintech ecosystem.
- Increasing defense and infrastructure spending.
The Economic Survey 2024-25 provides a comprehensive assessment of India’s financial health, challenges, and growth prospects. While the economy remains resilient, policy measures will be critical in ensuring sustained growth, boosting investments, and achieving the nation’s ambitious $4 trillion GDP target.
As India gears up for the Budget 2025-26, both businesses and citizens will be looking for measures that support economic stability, job creation, and improved living standards. Stay tuned for further analysis and updates as the Union Budget unfolds on February 1, 2025.
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