Economic Survey 2024-25: Overview & Key Insights

Notes, Survey & Budget

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.
  • 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.
  • 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:

  • 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 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

  1. National Infrastructure Pipeline (NIP):
    • Investment target of ₹111 lakh crore (FY20-FY25).
    • Covers 9,766 projects across 37 sub-sectors.
  2. 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:

  • 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.
  • 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:

  • 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:

  • 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):
    1. Code on Wages, 2019.
    2. Code on Social Security, 2020.
    3. Industrial Relations Code, 2020.
    4. 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.

Have any suggestions… Let us know

Google search