Finance Minister Nirmala Sitharaman presented the Economic Survey 2024-2025 in Parliament, offering a comprehensive analysis of the country’s economic health and future trajectory.
The annual document, prepared by Chief Economic Advisor V. Anantha Nageswaran and his team, outlines key economic trends and projections ahead of the Union Budget.
Here are some key takeaways:
The Economic Survey projects India's real GDP to expand by 6.4% in FY25, with growth estimates for FY26 ranging between 6.3% and 6.8%. The document highlights India’s strong economic fundamentals, emphasizing a stable private consumption, a balanced external account, and continued fiscal consolidation.
“The fundamentals of the domestic economy remain robust... We expect that the growth in FY26 would be between 6.3% and 6.8%,” the survey noted.
Retail inflation, as measured by the Consumer Price Index (CPI), moderated from 5.4% in FY24 to 4.9% during April-December 2024, largely due to a 0.9 percentage point decline in core inflation. The survey attributed the decline to global monetary tightening and improving supply chains.
However, food inflation remains a concern due to weather disruptions, supply chain issues, and lower harvests in key crops such as vegetables and pulses. The survey anticipates a softening in food inflation in FY25 due to better Kharif harvest arrivals and seasonal easing of vegetable prices. “Good Rabi production is likely to contain food prices in the first half of FY26,” it stated.
The unemployment rate in 2023-24 dropped to 3.2%, a significant decline from 6% in 2017-18. The government’s employment-boosting initiatives, including the PM-Internship Scheme, were highlighted as key contributors to this trend.
“The government has implemented measures to boost employment, foster self-employment, and promote worker welfare,” the survey noted.
The formal sector has seen substantial expansion, with Employees’ Provident Fund Organisation (EPFO) subscriptions more than doubling in FY24, jumping from 61 lakh to 131 lakh. Of these, 95.6 lakh new subscriptions were added between April and November 2024, primarily driven by youth employment, as nearly 47% of new payroll additions came from workers aged 18-25 years.
Construction emerged as a standout performer, growing 15% above pre-pandemic levels due to robust infrastructure development and strong housing demand.
Meanwhile, the utilities sector (electricity, gas, water supply, and other services) has maintained growth beyond pre-pandemic levels, whereas manufacturing is still recovering and remains slightly below its pre-pandemic trajectory. Mining continues to operate below its historical trend.
The survey highlighted strong performance in the agriculture sector, with Kharif food grain production reaching a record 1,647.05 lakh metric tonnes (LMT) in FY25, representing a 5.7% rise over FY24 and 8.2% higher than the five-year average.
The increase was largely driven by higher output of rice, maize, coarse grains, and oilseeds. The normal southwest monsoon in 2024 improved water reservoir levels, ensuring adequate irrigation for Rabi crops.
Total exports, including merchandise and services, recorded a 6% growth in the first nine months of FY25, reaching $602.6 billion. Growth in non-petroleum, non-gems & jewellery exports stood at 10.4%. Imports also rose by 6.9%, supported by stable domestic demand.
The survey noted that India’s export growth has historically been closely linked to global trade growth, but domestic economic levers will play a greater role going forward.
Foreign Direct Investment (FDI) inflows surged 17.9% YoY between April and November 2024, reaching the highest level recorded during this period, except for FY21. However, net FDI declined due to higher repatriation rates, which rose 33.2% YoY following a 51.5% increase in FY24.
The surge in secondary sales and IPO exits by multinational firms was cited as a reflection of investor confidence in the Indian market.
As of January 3, 2025, India’s forex reserves stood at $634.6 billion, covering 90% of external debt and over 10 months of imports.
Additionally, India remained the world’s top recipient of remittances, driven by strong employment growth in OECD economies, helping to contain the Current Account Deficit (CAD) at 1.2% of GDP in Q2 FY25.
The Economic Survey cited RBI’s Financial Stability Report (FSR) of December 2024, noting that gross non-performing assets (NPAs) had declined to a 12-year low of 2.6% of total loans. Stress tests indicate that banks will maintain sufficient capital even in adverse conditions.
The survey underscored India’s rapid ascent as a global economic powerhouse, noting that the country jumped from the world’s 10th largest economy in 2014 to 4th place today. “India is poised to become the third-largest economy by 2030, following the USA and China,” the report stated.
It attributed this trajectory to a young workforce, a robust manufacturing sector, and demographic advantages. With a median age of 28 years, India’s workforce remains significantly younger than those of aging developed economies, offering a strong foundation for long-term growth.