New Delhi: The Economic Survey for 2024-25 was tabled in parliament today, January 31, ahead of the presentation of the Union Budget tomorrow.
There are upsides and downsides to domestic investment, output growth and disinflation in FY26, says this survey. “Nonetheless, the fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption,” it says, before noting that growth in FY26 would be between 6.3 and 6.8%.
The survey was presented by Union finance minister Nirmala Sitharaman after President Droupadi Murmu’s address. This survey comes within six months of the last, which was presented after the new government under the National Democratic Alliance came to power, in July 2024.
As is tradition, the survey was prepared by the economic division of the Department of Economic Affairs (DEA) under chief economic advisor V. Anantha Nageswaran. One of Nageswaran’s predecessors has told The Wire a day ago that the government’s DNA vis-a-vis economic policies needs to change for improvement to occur.
The survey this year is a 482-page document.
GDP, inflation and jobs
It claims that India’s GDP at constant (2011-12) prices grew by 6.7% and 5.4% in Q1 and Q2 FY25, respectively, and that this implied a real GDP growth of 6% in the first half of the current fiscal.
On the supply side, real gross value added (GVA) is also estimated to grow by 6.4%. The agriculture sector is expected to rebound to a growth of 3.8% in FY25. The industrial sector is estimated to grow by 6.2% in FY25. “Strong growth rates in construction activities and electricity, gas, water supply and other utility services are expected to support industrial expansion,” it says.
Growth in the services sector is expected to remain robust at 7.2%, “driven by healthy activity in financial, real estate, professional services, public administration, defence, and other services.”
The survey claims inflation is coming under control. Retail headline inflation, as measured by the change in the Consumer Price Index (CPI), has softened from 5.4% in FY24 to 4.9% in April-December 2024, it says.
It attributes the decline to a 0.9 percentage point reduction in core (non-food, nonfuel) inflation between FY24 and April-December 2024. While the average inflation in FY25 has trended downward, monthly volatility in food prices and a select few commodities have been responsible for CPI inflation printing towards the upper side of the tolerance band of 4 (+/-) 2%, in conceded.
The ES did not note how the package of five key schemes aimed at benefiting 4.1 crore youth over five years with a central outlay of Rs 2 lakh crore to promote employment and skilling, introduced in the Union Budget 2024-25, was being unfurled.
FPI, trade
Foreign portfolio investment (FPI) flows have been volatile in the second half of 2024, primarily on account of global geopolitical and monetary policy developments, the survey claims.
“Net FPI inflows slowed to USD 10.6 billion in April-December 2024 from USD 31.7 billion during the same period the previous year. The inclusion of India’s sovereign government securities (G-secs) of certain tenors in the JP Morgan EM Bond Index induced heightened activity within the debt segment of the FPIs,” it said.
It also said that India’s foreign exchange reserves increased from USD 616.7 billion at the end of January 2024 to USD 704.9 billion in September 2024 before moderating to USD 634.6 billion on January 3, 2025. It will cover 90% of external debt, the survey claimed.
The survey also calls for deregulation. The introduction acknowledges that “every chapter of the Economic Survey makes a case for simplification and deregulation wherever possible and necessary,” but that it also acknowledges areas where more or appropriate regulatory intervention may be necessary.
“Overall, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential,” it says.
