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| Economic Survey 2024-25 |
India’s Economic Growth Outlook: Key Highlights from the Economic Survey
2024-25
India’s economy is poised for steady growth,
with the Economic Survey 2024-25 projecting a real GDP growth of 6.4% in FY25,
close to its decadal average. The medium-term outlook for FY26 is even more
promising, with GDP expected to grow between 6.3% and 6.8%. This article delves
into the key drivers of India’s economic growth, sectoral performance, and
policy recommendations outlined in the Survey.
1. Robust
GDP and GVA Growth
India’s real GDP is estimated to grow at 6.4%
in FY25, supported by strong private consumption and rural demand. The real
Gross Value Added (GVA) is also projected to grow at 6.4%, with significant
contributions from agriculture, industry, and services.
- Agriculture: Expected to grow at 3.8% in FY25, driven by record Kharif
foodgrain production of 1647.05 lakh metric tonnes (LMT), a 5.7% increase
over the previous year. Key growth drivers include horticulture,
livestock, and fisheries.
- Industry: Estimated to grow at 6.2%, supported by construction,
electricity, and utility services.
- Services: Growth remains robust at 7.2%, fueled by financial, real estate,
and professional services.
2.
Inflation and Fiscal Stability
Retail headline inflation softened to 4.9%
during April-December 2024, with food inflation rising slightly to 8.4%. The
Survey projects consumer price inflation to align with the RBI’s target of
around 4% by FY26. Fiscal stability is underscored by declining gross
non-performing assets (NPAs) in the banking sector, which hit a 12-year low of
2.6%.
3. Capital
Expenditure and Infrastructure Investment
Capital expenditure (capex) grew by 8.2%
during July-November 2024 and is expected to accelerate further. The Survey
emphasizes the need for sustained infrastructure investment over the next two
decades to maintain high growth. Key achievements include:
- Commissioning of 2031 km of railway
network and introduction of 17 new Vande Bharat trains.
- A 15.8% year-on-year increase in solar
and wind power capacity by December 2024.
4. Export
Growth and FDI Inflows
India’s overall exports grew by 6%
year-on-year during April-December 2024, with services exports surging by
12.8%. Gross FDI inflows increased by 17.9% to USD 55.6 billion in the first
eight months of FY25. Foreign exchange reserves stood at USD 640.3 billion as
of December 2024, sufficient to cover 10.9 months of imports.
5.
Employment and Social Sector Growth
The unemployment rate declined to 3.2% in
2023-24, down from 6% in 2017-18. Social services expenditure grew at an annual
rate of 15% between FY21 and FY25, with significant improvements in health and
education:
- Government health expenditure increased
from 29% to 48% of total health spending between FY15 and FY22.
- Out-of-pocket health expenses declined
from 62.6% to 39.4% during the same period.
6. MSMEs
and Self-Reliant India Fund
The Micro, Small, and Medium Enterprises
(MSME) sector continues to thrive, supported by the launch of the ₹50,000 crore
Self-Reliant India Fund. This fund aims to provide equity funding to MSMEs with
high growth potential.
7.
Deregulation and Ease of Doing Business 2.0
The Survey advocates for systematic
deregulation to boost economic growth. It recommends a three-step process for
states to review regulations, reduce costs, and improve efficiency. Ease of
Doing Business (EoDB) 2.0 focuses on liberalizing standards, reducing tariffs,
and applying risk-based regulation.
8. Global
Context and Challenges
While the global economy grew by 3.3% in 2023,
the IMF projects modest growth of 3.2% over the next five years. India’s growth
prospects are balanced, with potential headwinds from geopolitical
uncertainties and commodity price shocks. However, rural demand, easing food
inflation, and a stable macroeconomic environment provide upside potential.
Conclusion
India’s economic outlook remains positive,
driven by strong domestic demand, robust exports, and strategic policy
interventions. To achieve its vision of becoming a developed economy by 2047,
India must focus on grassroots-level reforms, deregulation, and sustained
infrastructure investment. Collaborative efforts between the government,
private sector, and academia will be crucial to navigating challenges and
unlocking long-term growth potential.
By focusing on these key areas, India can
reinforce its position as one of the fastest-growing major economies in the
world.
Solve: MCQ on Economic Survey 2024-25
Source: PIB
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