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Economic Survey 2024-25
Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman presented the Economic Survey 2024-25 in the Parliament on 31st January. The highlights of the survey are as follows;
State of the Economy: Getting Back into the Fast Lane
1. India’s real GDP growth is estimated at 6.4 per cent in FY25 (as per first advance estimates of national income), which equates nearly to its decadal average.
2. Real gross value added (GVA) is also estimated to grow by 6.4 per cent FY25.
3. The global economy on an average grew by 3.3 per cent in 2023 against the IMF projection of 3.2 per cent growth in the next five years.
4. The real GDP growth in FY26 is expected to grow between 6.3 and 6.8 per cent, keeping in mind the upsides and downsides to growth.
5. Thrust on grassroots-level structural reforms and deregulation to reinforce the medium-term growth potential and boost global competitiveness of Indian economy.
6. Geopolitical tensions, ongoing conflicts and global trade policy risks continue to pose significant challenges to the global economic outlook.
7. Retail headline inflation has softened from 5.4 per cent in FY24 to 4.9 per cent in April –December 2024.
8. Capital expenditure (CAPEX) improved continuously from FY21 to FY24. Post general elections, CAPEX grew YOY by 8.2 per cent during July –November 2024.
9. India accounts for seventh-largest share in global services exports, underscoring India’s global competitiveness in the sector.
10. During April to December 2024, non-Petroleum and non-Gems & Jewellery exports went up by 9.1 per cent reflecting resilience of India’s merchandise exports amid volatile global conditions.
Monetary and Financial Sector Developments: The Card and the Horse
1. Bank credit has grown at a steady rate with credit growth converging towards deposit growth.
2. Profitability of Scheduled Commercial Banks improved, reflected in a fall in gross non-performing assets (GNPAs) and rise in capital to risk weighted asset ratio (CRAR).
External Sector: Getting FDI Right
1. India’s external sector continues to display resilience amidst global uncertainties and headwinds.
2. Overall exports (merchandise + services) grew by 6 per cent (YOY) in the first nine months of FY25. Services sector by 11.6 per cent during the same time.
3. India commands 10.2 per cent of the global export market in ‘Telecommunications, Computer, & Information Services’, ranking 2nd largest exporter in the world, as per UNCTAD.
4. India’s current account deficit (CAD) stood at 1.2 per cent of GDP in Q2 of FY25, supported by rising net services receipts and an increase in private transfer receipts.
5. Gross Foreign Direct Investment (FDI) inflows recorded a revival in FY25, increasing from USD 47.2 billion in the first eight months of FY24 to USD 55.6 billion in the same period of FY25, a YoY growth of 17.9 per cent.
6. India’s FOREX reserves stood at USD 640.3 billion as of the end of December 2024, sufficient to cover 10.9 months of imports and approximately 90 per cent of the country’s external debt.
Prices and Inflation: Understanding the Dynamics
1. As per the IMF, the global inflation rate moderated to 5.7 per cent by 2024 from its peak of 8.7 per cent in 2022.
2. Retail inflation in India saw a reduction from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December 2024).
3. RBI and the IMF project India’s consumer price inflation will gradually align with the target of around 4 per cent in FY26.
4. Development of climate-resilient crop varieties and enhanced farming practices are essential to mitigate the effects of extreme weather events and achieve long-term price stability.
Investment and Infrastructure: Keeping it Going
1. The central focus of the Government in the last five years was on increasing public spending on infrastructure, and speeding up approvals and resource mobilization.
2. The Union Government‘s capital expenditure on key infrastructure sectors has grown at a rate of 38.8 per cent from FY20 to FY24.
3. Under railway connectivity, 2031 km of railway network was commissioned between April and November, 2024, and 17 new pairs of Vande Bharat trains were introduced between April and October 2024.
Industry: All about Business Reforms
1. The industrial sector expected to grow by 6.2 per cent in FY-25 (first advance estimates), driven by robust growth in electricity and construction.
2. The government has been actively promoting Smart Manufacturing and Industry 4.0, supporting the establishment of SAMARTH Udyog centres.
3. In FY24, the Indian automobile domestic sales grew by 12.5 per cent.
Services -New Challenges for the Old War Horse
1. The service sector’s contribution to total GVA has risen from 50.6 per cent in FY14 to 55.3 per cent in FY25 (First Advance Estimates).
2. The average growth rate of the services sector was 8 per cent in the pre-pandemic years (FY13 -FY20). It stood at 8.3 per cent in the post-pandemic period (FY23–FY25).
3. India held a 4.3 per cent share in global services exports in 2023, ranking seventh worldwide.
Chapter-9 Agriculture and Food Management: Sector of the Future
1. The ‘Agriculture and Allied Activities‘ sector contributes approximately 16 per cent of the country’s GDP for FY24 (PE) at current prices.
2. High-value sectors like horticulture, livestock, and fisheries have become key drivers of overall agricultural growth.
3. Kharif foodgrain production for 2024 is expected to reach 1647.05 Lakh Metric Tonnes (LMT), an increase of 89.37 LMT from the previous year.
4. For the fiscal year 2024-25, the MSP for Arhar and Bajra has been increased by 59 per cent and 77 per cent over the weighted average cost of production, respectively.
Climate & Environment: Adaptation Matters
1. India’s ambition to achieve developed nation status by 2047 is fundamentally anchored in the vision of inclusive and sustainable development.
2. India has installed electricity generation capacity of 2,13,701 megawatts from non-fossil fuel sources, which accounts for 46.8 per cent of the total capacity as of 30 November 2024.
3. As per the Forest Survey of India 2024 an additional carbon sink of 2.29 billion tonnes CO2 equivalent has been created between 2005 and 202
Social Sector -Extending reach and driving empowerment
1. The social services expenditure of the government (combined for Centre and States) increased at a compound annual growth rate of 15 per cent from FY21 to FY 25.
2. Gini coefficient, a measure of inequality in consumption expenditure, is declining. For rural areas it declined to 0.237 in 2023-24 from 0.266 in 2022-23, and for urban areas, it fell to 0.284 in 2023-24 from 0.314 in 2022-23.
3. Various fiscal policies of the government are aiding in reshaping the income distribution.
Employment and Skill Development: Existential priorities
1. Indian labour market indicators have improved with unemployment rate declining to 3.2 per cent in 2023-24 (July-June) from 6.0 per cent in 2017-18 (July-June).
2. With around 26 per cent of the population in the age group of 10-24 years, India stands at the cusp of a unique demographic opportunity, as one of the youngest nations globally.
3. To give a fillip to women’s entrepreneurship, the government has launched several initiatives in terms of easier access to credit, marketing support, skill development, and support to women start-ups, etc.
Labour in the AI Era: Crisis or Catalyst?
1. Developers of Artificial Intelligence (AI) promise to usher in a new age, where a bulk of the economically valuable work is automated.
2. AI is anticipated to surpass human performance in critical decision-making across various fields, including healthcare, research, criminal justice, education, business, and financial services.
3. Barriers to large-scale AI adoption persist in the present, which include concerns over reliability, resource inefficiencies, and infrastructure deficits. These challenges, along with AI’s experimental nature, create a window for policymakers to act.