Table of Contents
What is the Economic Survey?
The Economic Survey provides an annual review of India’s economic performance, government policies, and future outlook. It serves as a key policy document guiding the Union Budget.
Historical Context
- First Economic Survey: 1950-51.
- Presented with the Union Budget until 1964; now released a few days before the budget.
- Prepared by: Economic Division, Department of Economic Affairs, guided by the Chief Economic Adviser (CEA).
Role of the Economic Survey
- Analyzes economic trends (GDP growth, inflation, fiscal health, trade).
- Provides policy recommendations for the government.
- Helps shape the Union Budget with forward-looking economic guidance.
Key Findings from the Last Economic Survey
1. GDP Growth
- Estimated at 6.5%-7% for 2024-25 (8.2% in 2023-24).
- Driven by investment, agriculture, and exports.
- Risks: Geopolitical tensions, inflation, monsoon impact.
2. Inflation Trends
- Retail inflation: 5.4% in 2023-24 (lowest since COVID-19).
- Projected inflation for 2024-25: 4.5% (RBI estimate).
- Measures needed: Expanding pulse cultivation, improving storage infrastructure.
3. Current Account Balance
- Deficit reduced to 0.7% of GDP (2023-24) from 2% (2022-23).
- Reasons: Lower trade deficit, higher remittances.
- Risks: Global demand fluctuations, trade policy changes.
4. Fiscal Deficit & Public Finance
- Fiscal Deficit: Reduced to 5.6% of GDP in 2023-24 (from 6.4% in 2022-23).
- Target for 2025-26: 4.5% of GDP.
Conclusion
The Economic Survey provides critical insights into India’s economic strengths, risks, and policy priorities. It sets the stage for the Union Budget and helps the government in strategic decision-making.
1. State of the Economy:
India’s Economic Performance in FY25
- Real GDP Growth: Estimated at 6.4% in FY25, aligning with its decade average.
- Sectoral Growth:
- Agriculture: 3.8%
- Industry: 6.2%
- Services: 7.2%
- Fiscal Deficit: 5.6% in FY24, targeted to reduce to 4.5% by FY26.
- Current Account Deficit (CAD): 1.2% of GDP in Q2 of FY25.
- Retail Inflation: Declined from 5.4% in FY24 to 4.9% in April-December 2024.
- Capital Expenditure (CAPEX): Grew by 8.2% YoY during July-November 2024.
Global Economy in 2024
- Growth: Global economy grew by 3.3% in 2023, slightly above IMF’s 3.2% projection.
- Manufacturing Slowdown: Particularly in Europe and Asia due to weak demand.
- Geopolitical Risks:
- Middle East conflicts disrupting trade via the Suez Canal.
- Rising World Trade Uncertainty Index (8.5 in 2023 → 13 in 2024).
- India’s Growth Drivers:
- Private sector investment.
- Improved consumer confidence and wage growth.
- Rural demand revival due to better agricultural output.
2. Monetary and Financial Sector Developments:
Banking Sector Performance
- Bank Credit Growth: Strong, converging towards deposit growth.
- Bank Profitability:
- Gross Non-Performing Assets (GNPAs) at a 12-year low of 2.6% (Sep 2024).
- Capital-to-Risk Weighted Asset Ratio (CRAR) improved.
- Profit After Tax (PAT) of SCBs grew 22.2% YoY in H1 FY25.
Emerging Financial Trends
- Rise in Consumer Credit: Higher unsecured lending and digital borrowing.
- Increase in Equity Financing:
- IPOs increased sixfold (FY13-FY24).
- India had 30% of global IPO listings in 2024 (up from 17% in 2023).
- Financial Inclusion:
- Financial Inclusion Index: Improved from 53.9 (2021) to 64.2 (2024).
- Development Financial Institutions (DFIs) played a major role in infrastructure financing.
Cybersecurity & Regulation
- Cybersecurity:
- India ranked Tier 1 in the Global Cybersecurity Index 2024 with 98.49/100.
- Cyberattacks have increased fourfold since 2017, causing $2.5 billion in losses.
- Financial Market Trends:
- Indian stock markets outperformed other emerging markets despite volatility.
- Investor base grew from 4.9 crore in FY20 to 13.2 crore by Dec 2024.
3. External Sector:
Global Trade Trends
- Rising Protectionism: Increasing tariffs and trade barriers.
- Geoeconomic Fragmentation:
- US-China trade war, EU’s Carbon Border Adjustment Mechanism (CBAM).
- Supply chain realignments benefiting India.
- Geopolitical Risks: Russia-Ukraine war, Israel-Palestine conflict, Red Sea disruptions.
India’s External Sector Performance
- Exports:
- Overall exports (goods + services) grew by 6% YoY in FY25.
- Services sector exports grew by 11.6% YoY.
- India ranks 2nd in global IT service exports (10.2% market share).
- Imports:
- Grew by 6.9%, reaching $682.2 billion due to strong domestic demand.
- FDI & FPI Trends:
- Gross FDI inflows revived in first 8 months of FY25.
- Net FDI inflows declined due to higher repatriation.
External Stability
- Foreign Exchange Reserves: $640.3 billion (Dec 2024), covering 89.9% of external debt.
- External Debt: $711.8 billion (Sep 2024).
- Exchange Rate: Rupee remained stable due to strong forex reserves and monetary policies.
Way Forward
- Strengthen domestic industries to reduce import reliance.
- Improve trade facilitation and logistics efficiency.
- Use Free Trade Agreements (FTAs) to integrate into global value chains.
4. Prices and Inflation:
Global & Domestic Inflation Trends
- Global Inflation:
- Peaked at 8.7% in 2022, but fell to 5.7% in 2024.
- Declining commodity prices expected in 2025 (-5.1%).
- India’s Inflation:
- Retail Inflation: Declined from 5.4% (FY24) to 4.9% (FY25).
- Food Inflation: Remains a major concern (vegetables, pulses, onions, tomatoes).
Challenges in Managing Inflation
- Supply Chain Issues:
- Vegetables: Price spikes due to seasonal supply disruptions.
- Pulses: Lower production of tur dal in recent years.
- Global Commodity Prices:
- Oil prices declining, but natural gas and agricultural raw materials remain stable.
Policy Recommendations
- Agricultural Reforms:
- Invest in climate-resilient crops and farmer training.
- Supply Chain Management:
- Improve storage and transportation to reduce post-harvest losses.
- High-frequency price monitoring for essentials.
- Balanced Monetary Policy: Control inflation while supporting growth.
5. Medium-Term Outlook:
Growth Outlook
- India’s GDP Target: $5 trillion by FY28, $6.3 trillion by FY30.
- Projected Growth: 10.2% nominal GDP growth (FY25-FY30).
- Short-Term Trends:
- India’s nominal GDP grew by 12.4% annually over 30 years.
- Expected 10.7% growth in next five years.
Deregulation for Growth
- Regulatory Challenges:
- Excessive compliance limits formalization and employment growth.
- MSMEs stay small to avoid regulations, hampering productivity.
- Geo-Economic Fragmentation (GEF):
- UNIDO projects China to dominate 45% of global manufacturing by 2030.
- Rising trade restrictions (affecting $887.7 billion in trade).
Way Forward
- Deregulation is key to unlocking India’s growth potential.
- Empowering MSMEs can drive innovation and competition.
- Reducing regulatory burdens will enhance efficiency, lower costs, and boost employment.
Key Takeaways
- India’s economy remains resilient, driven by strong domestic demand, investment growth, and stable macroeconomic indicators.
- Financial sector reform is necessary to balance innovation with financial stability.
- Global economic risks, inflation trends, and regulatory policies will shape India’s economic trajectory in the coming years.
6. Investment and Infrastructure:
Government’s Focus on Infrastructure
- Massive capital expenditure (CapEx) push in infrastructure.
- Union Government’s CapEx trend: Grew at 38.8% CAGR from FY20 to FY24.
Key Infrastructure Initiatives
- National Infrastructure Pipeline (NIP):
- Investment target of ₹111 lakh crore (FY20-FY25).
- Covers 9,766 projects across 37 sub-sectors.
- National Monetisation Pipeline (NMP):
- Focus on private investment in brownfield assets.
Sector-wise Developments
Physical Connectivity
- Railways: 96.4% of Dedicated Freight Corridors (DFCs) commissioned.
- Roads:
- Bharatmala Pariyojana: 76% of 34,800 km awarded, 18,926 km completed.
- High-Speed Corridors expanded from 93 km (2014) to 2,474 km (2024).
- Aviation:
- ₹91,000 crore investment in airport infrastructure (91% achieved by Nov 2024).
- UDAN scheme: 619 operational routes, 88 airports connected.
Ports & Shipping
- Improved operational efficiency in FY25.
- Reduction in container turnaround time.
Power Sector
- Installed capacity: 456.7 GW (Nov 2024).
- Renewable Energy: 209.4 GW (47% of total capacity).
Digital Infrastructure
- 5G services launched in all states/UTs by Oct 2024.
- Cloud computing initiatives like MeghRaj (GI Cloud) expanding.
Rural Infrastructure
- Jal Jeevan Mission: Over 12 crore families received piped drinking water.
- Swachh Bharat Mission (SBM-G): ODF Plus villages development.
Conclusion
- Infrastructure growth remains central to economic development.
- Public-Private Partnerships (PPPs) are key to sustained investments.
7. Industry:
Industrial Growth Trends
- Projected Growth: 6.2% in FY25 (driven by electricity & construction).
- Global Industrial Share:
- India holds 2.8% of global manufacturing.
- Key sectors: Automobiles, Electronics, Pharmaceuticals.
Challenges & Trends
- Manufacturing exports slowed due to global demand fluctuations.
- Innovation & IPR:
- India ranks 6th in global patent filings (WIPO Report 2022).
- Patent Amendment Rules 2024 streamlined the process.
State-wise Industrial Performance
- Top contributors: Gujarat, Maharashtra, Karnataka, Tamil Nadu (43% of India’s industrial value).
- Northeastern states contribute just 0.7%.
Conclusion
- India’s industrial sector needs synchronized efforts from government, private sector, and academia.
- Focus on innovation, deregulation, and global integration.
8. Services:
Global Context
- Services account for 62% of global GDP.
- India’s services sector GVA: 50.6% (FY14) → 55% (FY25).
- Services exports grew by 12.8% in April-Nov FY25.
- India ranks 7th globally in services exports (4.3% market share).
Key Sub-Sectors
Tourism & Hospitality
- Contributed 5% to GDP in FY23.
- Employment: Created 7.6 crore jobs in FY23.
- International tourist arrivals back to pre-pandemic levels (2023).
Real Estate
- Housing demand to reach 93 million units by 2036.
- Residential sales hit an 11-year high in 2024.
IT & Telecom
- IT services revenue: $254 billion (FY24).
- Global Capability Centers (GCCs):
- Increased from 1,430 (FY19) to 1,700 (FY24).
- Employs 1.9 million professionals.
Telecommunications
- India has 941 million broadband users (Oct 2024).
- Monthly data usage per user: 19.3 GB (FY24).
Key Recommendations
- Skilling & digital literacy to prepare workforce.
- Reduce regulatory hurdles for ease of business.
- Promote servicification (using more services in manufacturing).
9. Agriculture and Food Management:
Sector Overview
- Consistent Growth: Averaging 5% annual growth (FY17-FY23).
- Agriculture GDP share: 16% in FY24.
- Employs 46.1% of the population.
Challenges
- Climate Variability: Droughts, erratic rainfall affecting productivity.
- Low Irrigation Coverage: Only 55% of net sown area is irrigated.
Key Government Initiatives
Agriculture Credit
- Kisan Credit Card (KCC): 7.75 crore operational accounts.
- Non-institutional credit reliance fell from 90% (1950) to 25% (FY22).
Mechanization & Modernization
- Sub-Mission on Agricultural Mechanization (SMAM): Supports training & machinery.
- Namo Drone Didi: Targets 15,000 women SHGs to provide drone services.
Food Processing & Export Growth
- Processed food exports: 23.4% of agri-food exports in FY24.
- Key Schemes:
- PM Kisan Sampada Yojana (PMKSY).
- Production Linked Incentive Scheme for Food Processing (PLISFPI).
Conclusion
- Market-driven policies and climate-resilient agriculture are crucial for growth.
- Infrastructure and technology adoption are key for sustainable agriculture.
10. Climate & Environment:
India’s Climate Strategy
- Climate Adaptation Spending: Increased from 3.7% of GDP (FY16) to 5.6% (FY22).
- National Adaptation Plan (NAP) in progress.
- India is the 7th most vulnerable country to climate change.
Sectoral Adaptation Measures
Agriculture
- Climate-resilient crops & modified cropping patterns.
- Water conservation techniques.
Urban Resilience
- Smart Cities Mission integrating climate measures.
- AMRUT & AMRUT 2.0: Flood & green mobility projects.
Coastal Protection
- MISHTI (2023-2028): Restoring 540 sq km of mangroves.
- Coastal Regulation Zone (CRZ) 2019 for ecosystem protection.
Energy Transition & Renewable Energy
- Renewables account for 22.8% of energy generation.
- Challenges: Battery storage, critical minerals for solar & wind.
- Coal remains a dominant energy source.
Policy & Financial Regulations
- Sovereign Green Bonds: ₹20,000 crore issued in FY24.
- Business Responsibility and Sustainability Report (BRSR): Mandatory for top 1000 companies.
Conclusion
- India targets net zero by 2070.
- Balancing economic growth with climate resilience is key.
11. Social Sector:
Government’s Social Spending Trends
- Social Services Expenditure (SSE) increased from 23.3% (FY21) to 26.2% (FY25).
- Sector-wise expenditure:
- Education: ₹5.8 lakh crore (FY21) → ₹9.2 lakh crore (FY25) (CAGR 12%).
- Healthcare: ₹3.2 lakh crore (FY21) → ₹6.1 lakh crore (FY25) (CAGR 18%).
Key Social Indicators
Education
- School Enrollment:
- 24.8 crore students across 14.72 lakh schools.
- Govt. schools constitute 69% of total schools, enrolling 50% of students.
- Higher Education:
- Institutions grew by 13.8% (2014-23).
- Gross Enrollment Ratio (GER) increased from 23.7% to 28.4%.
- Technology in Education:
- AI-driven personalized learning, digital literacy programs.
Healthcare
- Ayushman Bharat Scheme: Saved ₹1.25 lakh crore in out-of-pocket expenses.
- E-Sanjeevani: World’s largest telemedicine initiative.
- Mental Health Focus:
- Social media addiction, poor diet, and stress affect youth mental health.
- Workplace well-being is crucial for economic productivity.
Rural Development & Welfare Programs
- Jal Jeevan Mission: 12 crore households now have piped drinking water.
- Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS):
- 308.9 crore person-days generated (FY24).
- 58.9% women participation.
- Women Empowerment:
- Self-Help Groups (SHGs): 90.9 lakh SHGs mobilized 10 crore households.
- Start-Up Village Entrepreneurship Program (SVEP): 3.13 lakh enterprises supported.
Conclusion
- Expanding education, healthcare, and skilling is crucial.
- Technology-driven service delivery can boost rural development.
12. Employment and Skill Development:
Labour Market Trends
- Unemployment Rate fell to 3.2% (FY24) (from 6% in FY18).
- Agriculture remains dominant in employment (46.1% share).
- Industry & Services sector employment declined slightly.
Women in Workforce
- Female Labour Force Participation Rate (FLFPR):
- Risen from 23.3% (FY18) to 41.7% (FY24).
- States with >40% FLFPR: Sikkim leads with 56.9%.
Government Initiatives
- Four Labour Codes (simplifying 44 existing laws):
- Code on Wages, 2019.
- Code on Social Security, 2020.
- Industrial Relations Code, 2020.
- Occupational Safety, Health, and Working Conditions Code, 2020.
Skill Development Initiatives
- PM Kaushal Vikas Yojana (PMKVY):
- 1.57 crore trained, 1.21 crore certified.
- Women participation: 58% in FY25.
- ITI & Apprenticeships:
- 1,000 ITIs to be upgraded under new schemes.
- 37.94 lakh apprentices engaged.
- Credit Facilitation:
- Skill Loan limit raised to ₹7.5 lakh.
- 75% government guarantee for loans up to ₹4 lakh.
Conclusion
- Skilling & digital reskilling are crucial for India’s employment growth.
- Women’s workforce participation & self-employment must be further encouraged.
13. Labour in the AI Era:
Impact of AI on Employment
- AI market projected to grow 25-35% CAGR by 2027 (NASSCOM).
- Private investments in Generative AI reached $25.2 billion in 2023.
- Global AI patents increased by 62.7% (2021-2022).
Potential Risks
- 75 million global jobs at risk of automation (ILO Report).
- AI concentration among a few corporations may create monopoly effects.
- Job displacement risk is highest in routine, process-driven roles.
Opportunities for India
- Demographic Dividend:
- 26% of India’s population is aged 10-24.
- AI-driven jobs will require new skills in automation, coding, and data science.
- Augmented Intelligence:
- AI should be used to enhance, not replace, human work.
Way Forward
- AI Education:
- Incorporate AI and digital skills into school curriculums.
- Reskilling Initiatives:
- Collaboration between government, private sector, and academia.
- Regulatory Frameworks:
- Responsible AI adoption with legal protections.
Conclusion
- India must act now to reskill its workforce and embrace AI-driven transformation
Summary: Economic Survey 2024-25
1. State of the Economy: Getting Back into the Fast Lane
- GDP Growth: Estimated at 6.4% in FY25 (similar to the decade average).
- Sectoral Growth: Agriculture 3.8%, Industry 6.2%, Services 7.2%.
- Inflation: Retail inflation declined from 5.4% (FY24) to 4.9% (FY25).
- Fiscal Deficit: 5.6% of GDP (FY24), targeted at 4.5% by FY26.
- Global Challenges: Middle East conflicts, supply chain disruptions, rising trade protectionism.
2. Monetary & Financial Sector Developments
- Banking Sector: Gross NPAs at a 12-year low (2.6%), strong capital reserves.
- Equity Markets: India led 30% of global IPO listings in 2024.
- Financial Inclusion: Financial Inclusion Index rose from 53.9 (2021) to 64.2 (2024).
- Cybersecurity: India ranked Tier 1 in Global Cybersecurity Index (98.49/100).
3. External Sector: Getting FDI Right
- Exports: Grew by 6% YoY, services exports up 11.6%.
- Foreign Exchange Reserves: $640.3 billion (Dec 2024).
- Foreign Direct Investment (FDI): Revived but net inflows declined due to repatriation.
- Trade Challenges: US-China trade war, EU carbon regulations, geopolitical risks.
4. Prices & Inflation
- Global Inflation: Fell from 8.7% (2022) to 5.7% (2024).
- India’s Inflation: Retail inflation at 4.9% in FY25, food inflation remains a concern.
- Key Issues: Supply chain disruptions, climate shocks affecting food prices.
- Policy Measures: Better storage, climate-resilient crops, monetary policy balance.
5. Medium-Term Outlook: Deregulation Drives Growth
- India’s GDP Target: $5 trillion by FY28, $6.3 trillion by FY30.
- Regulatory Challenges: Excessive compliance limits MSME growth.
- Geo-Economic Fragmentation: China to dominate 45% of global manufacturing by 2030.
- Solution: Deregulation to boost entrepreneurship, investment, and efficiency.
6. Investment & Infrastructure
- Capital Expenditure (CapEx): ₹10 lakh crore investment in FY24.
- Key Projects: Bharatmala (76% completed), UDAN (619 air routes operational).
- Renewable Energy: 47% of installed power capacity from renewables.
7. Industry: Business Reforms & Growth
- Projected Industrial Growth: 6.2% in FY25.
- Innovation: India ranks 6th in global patent filings.
- Manufacturing Share: India holds 2.8% of global production.
8. Services Sector: A Growth Driver
- Services GDP Share: 55% (FY25), up from 50.6% (FY14).
- Exports: Services exports grew 12.8% YoY (April-Nov FY25).
- IT & Telecom: $254 billion revenue, GCC employment at 1.9 million.
9. Agriculture & Food Management
- Growth: 5% annual growth (FY17-FY23), employs 46.1% of the workforce.
- Irrigation: Only 55% of net sown area is irrigated.
- Food Processing: 23.4% of agri-exports now processed food.
10. Climate & Environment: Adaptation Matters
- Climate Adaptation Spending: 5.6% of GDP (FY22) (up from 3.7% in FY16).
- Renewable Energy Share: 22.8% of total power generation.
- Green Bonds: ₹20,000 crore raised in FY24.
- Challenges: Battery storage, climate shocks, and coal dependency.
11. Social Sector: Empowering Growth
- Education & Health Spending: 26.2% of total expenditure (FY25).
- Ayushman Bharat: ₹1.25 lakh crore savings in medical expenses.
- Rural Welfare: 90.9 lakh Self-Help Groups (SHGs) mobilizing rural women.
12. Employment & Skill Development
- Unemployment Rate: Dropped to 3.2% (FY24) from 6.0% (FY18).
- Women’s Workforce Participation: Increased from 23.3% to 41.7% (FY24).
- Skill Development: PMKVY trained 1.57 crore people.
- Labour Codes: Simplified 44 laws into 4 unified codes.
13. Labour & AI: A Crisis or Opportunity?
- AI Market Growth: 25-35% CAGR by 2027 (NASSCOM).
- Global AI Investments: $761 billion (2021-2023).
- Job Risks: 75 million jobs at risk due to automation.
- Way Forward: AI-driven reskilling, workforce adaptation, regulatory balance.