The Economic Survey 2024-25, presented by the Ministry of Finance, highlights deregulation as a key driver for economic growth, emphasizing the need to reduce regulatory complexity and shift towards risk-based governance. The report advocates a “Deregulation Stimulus” to enhance business innovation and competitiveness while stressing the importance of trust-based policies to unlock India’s economic potential. It underscores the necessity of attracting both domestic and foreign investments to bolster supply chains and strengthen India’s position in global trade. With the world facing economic uncertainties, India must focus on internal growth levers, including infrastructure expansion, industrial development, and private-sector participation in key sectors. The survey also discusses India’s strategic energy transition, prioritizing climate adaptation over emission mitigation and advocating for renewable energy while maintaining energy security.
The survey outlines the importance of technological advancements, particularly in Artificial Intelligence (AI), recommending the establishment of AI Centres of Excellence in top institutions with a substantial investment corpus. It also highlights the pressing need for stringent food labeling regulations to address rising consumption of ultra-processed foods, impacting youth health. Additionally, it emphasizes policies aimed at increasing women’s labor force participation, improving agricultural productivity, and fostering MSME growth through initiatives like the ₹50,000 crore Self-Reliant India Fund. India’s GDP is projected to grow between 6.3% and 6.8% in FY26, with significant contributions from the services sector, rising capital expenditure, and increasing foreign investments. The survey also points to strengthening financial stability, declining unemployment, and a robust external sector as key indicators of India’s economic resilience.
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Ministry of Finance
PREFACE OF ECONOMIC SURVEY 2024-25
PREFACE UNDERLINES DEREGULATION AS UNDERPINING THEME OF ECONOMIC SURVEY 2024-25
INDIA NEEDS TO MAKE AN ALL OUT EFFORT TO ATTRACT, PROMOTE AND FACILITATE FURTHER DOMESTIC AND FOREIGN INVESTMENTS TO BECOME A COMPETITIVE AND INNOVATIVE ECONOMY: ECONOMIC SURVEY
“INDIA MUST FOCUS ON CLIMATE CHANGE ADAPTATION THAN ON EMISSION MITIGATION”
SURVEY SUGGESTS ESTABLISHING ARTIFICIAL INTELLIGENCE CENTRES FOR EXCELLANCE (COE) AT TOP EDUCATIONAL INSTITUTIONS ACROSS INDIA
SURVEY ENDORSES NURTURING MENTAL, EMOTIONAL AND PHYSICAL NEEDS OF INDIAN YOUTH THROUGH ENFORCEMENT OF STRINGENT FRONT-OF-THE-PACK LABELING RULES ALARMING CONSUMPTION OF ULTRA-PROCESSED FOODS
Posted On: 31 JAN 2025 2:18PM by PIB Delhi
The Preface of the Economic Survey 2024-25, tabled in Parliament today by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman, argues for a philosophical approach to governance by rolling back regulations significantly to accelerate economic growth and employment amidst unprecedented global challenges.
The Preface to the Survey observes that the world is evolving more rapidly than anticipated, with the year 2024 having witnessed political and economic uncertainties world over, especially Europe, and with elections in three big democracies – India, USA and Indonesia.
Deregulation Stimulus
The Economic Survey argues, “Getting out of the way and allowing businesses to focus on their core mission is a significant contribution that governments around the country can make to foster innovation and enhance competitiveness.”
The Survey prescribes a Deregulation Stimulus to raise the growth average in the next two decades that require reaping the demographic dividend.
The Survey further argues that the Government needs to embrace risk-based regulations and change the operating principle of regulations from ‘guilty until proven innocent’ to ‘innocent until proven guilty’. Adding layers of operational conditions to policies to prevent abuse makes them incomprehensible and regulations needlessly complicated, taking them further from their original purposes and intents.
The Survey also delves into building a trust-based society to achieve economy of scale, just as the information technology sector and the startup ecosystem that emerged in Bengaluru in the ninties. Thereby, the Survey states, “It is a good bet that India public will overcome the challenges and turn them into opportunities on the way to Viksit Bharat by 2047.
Facilitating Strategic Investments
In the ecology of developing, developed and Emerging Market Economies, the Survey states that the era of rapid world trade growth has passed and India needs to make an all out effort to attract, promote and facilitate further domestic and foreign investments to become a competitive and innovative economy. The Survey also suggests that private sector strategic investments in strengthening domestic supply-chain capability and resilience will help in the long-term.
Noting the reality of global challenges, the Survey Preface states that domestic growth levers will be relatively more important than external ones in the coming years.
Climate Change and Energy Transition
The Survey lays great emphasis on the role of public policy in energy security and energy affordability in enhancing and maintaining competitiveness in the backdrop of climate change. The Survey argues for India charting its own path to energy transition and diversification away from fossil fuels as electric mobility makes economic sense due to abundant renewable energy and coal. More importantly, the Survey argues, public transportation is a more efficient alternative for viable energy transition given India’s vast size and limited land availability.
The Survey notes that India’s energy transition plans must be mindful of geographical vulnerabilities and avoid deepening India’s dependence on external sources for critical imports. The Survey argues for India to focus on adaptation than on emission mitigation.
Skilling and Education
The Survey states that for India’s youth to take advantage of technological advances such as Artificial Intelligence, skilling and education must enable youth to stay one step ahead of the technological developments to minimise or even eliminate its potential adverse impact on employment, and might even help in augmenting employment. The Survey also suggests establishing Artificial Intelligence Centres for Excellance (CoE) at top educational institutions across India with a Rs. 1 lakh crore financing corpus to catalyse private sector innovation and R&D in sunrise sectors.
Artificial Intelligence
Taking a balanced view on Artificial Intelligence (AI), the Survey argues that AI is not applicable as one for all solution and it does not apply to all the countries unequivocally, particularly so for a labour-rich country like India.
Healthy Eating: Healthy Living
In the backdrop of India’s rising and alarming consumption of ultra-processed foods (High in Fat, Salt and Sugar or HFSS), the Survey endorses nurturing the mental, emotional and physical needs of the Indian youth through enforcement of stringent front-of-the-pack labeling rules to release their vast potential. The Survey states that globally self-regulation has been ineffective to curtail this phenomenon.
Policy Priorities for Women, Farmers, Youth and Poor
The Survey posits that facilitating productive and enhanced participation of women, farmers, youth and poor in economic activity is the litmus test of inclusive development policies. For Youth, the Survey argues for focus on investment in education, skill, and physical and mental health. To bring Poor from the periphery to the centre of economic activity by advancing their income and living standards through empowerment, the Survey argues to provide targeted support to improve their livelihoods and opportunities. For Women, the Survey advocates to the Centre and the State Governments to eliminate legal and regulatory hurdles that hold back their participation in the labour force besides undertaking facilitative measures.
Industrial Activity
The Survey notes the positive correlation between States that score high on the ‘Ease of Doing Business’ parameters and the level of industrial activity, and also stated that aspiring States will need to raise their industrialization quotient.
The Survey also celebrates the success story of indigenisation of the Production–Linked Incentive Scheme in in air-conditioners through Government intervention.
External Sector Challenges
The Survey also anticipates challenges that India will face in the near future, such as threat of restrictive trade policies that have potential to reduce India’s exports and widen the current account deficit.
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Ministry of Finance
SUMMARY OF ECONOMIC SURVEY 2024-25
Posted On: 31 JAN 2025 2:23PM by PIB Delhi
INDIA’S GDP EXPECTED TO GROW BETWEEN 6.3 & 6.8 PER CENT IN FY26
REAL GDP ESTIMATED AT 6.4 PER CENT IN FY25, CLOSE TO ITS DECADAL AVERAGE
REAL GVA ESTIMATED TO GROW BY 6.4 PER CENT IN FY25
CAPEX GROWS AT 8.2 PER CENT IN JULY – NOVEMBER 2024 AND EXPECTED TO PICK UP FURTHER PACE
RETAIL HEADLINE INFLATION SOFTENED TO 4.9 PER CENT IN APRIL-DECEMBER 2024
INDIA’S CONSUMER PRICE INFLATION TO ALIGN WITH THE TARGET OF AROUND 4 PER CENT IN FY26
OVERALL EXPORTS GROW 6.0 PER CENT (YOY) DURING APRIL-DECEMBER 2024
INDIA’S SERVICES EXPORT GROWTH SURGED TO 12.8 PER CENT DURING APRIL–NOVEMBER FY25, UP FROM 5.7 PER CENT IN FY24
GROSS FDI INFLOWS INCREASE FROM USD 47.2 BILLION IN FIRST EIGHT MONTHS OF FY24 TO USD 55.6 BILLION IN THE SAME PERIOD OF FY25, A YOY GROWTH OF 17.9 PER CENT
FOREX AT USD 640.3 BILLION AS OF END OF DECEMBER 2024, SUFFICIENT TO COVER 10.9 MONTHS OF IMPORTS AND APPROXIMATELY 90 PER CENT OF EXTERNAL DEBT
CAPACITY ADDITION IN SOLAR AND WIND POWER INCREASES 15.8 PER CENT YEAR-ON-YEAR IN DECEMBER 2024
BSE STOCK MARKET CAPITALISATION TO GDP RATIO AT 136 PER CENT AT THE END OF DECEMBER 2024, FAR HIGHER THAN CHINA (65 PER CENT) AND BRAZIL (37 PER CENT)
ECONOMIC SURVEY ADVOCATES DEREGULATION TO ACCELERATE AND SUSTAIN ECONOMIC GROWTH
CONTINUED STEP-UP OF INFRASTRUCTURE INVESTMENT OVER NEXT TWO DECADES NEEDED TO SUSTAIN A HIGH GROWTH
₹50,000 CRORE SELF-RELIANT INDIA FUND LAUNCHED TO PROVIDE EQUITY FUNDING TO MSMES
AGRICULTURE EXPECTED TO GROW AT 3.8 PER CENT IN FY25
KHARIF FOODGRAIN PRODUCTION FOR 2024 IS EXPECTED TO REACH 1647.05 LMT, AN INCREASE OF 89.37 LMT OVER PREVIOUS YEAR
KEY DRIVERS OF AGRICULTURAL GROWTH ARE HORTICULTURE, LIVESTOCK & FISHERIES
INDUSTRIAL SECTOR ESTIMATED TO GROW BY 6.2 PER CENT IN FY25
SOCIAL SERVICES EXPENDITURE REGISTERS AN ANNUAL GROWTH RATE OF 15 PER CENT BETWEEN FY 21 AND FY 25
GOVERNMENT HEALTH EXPENDITURE INCREASES FROM 29.0 PER CENT TO 48.0 PER CENT; SHARE OF OUT OF POCKET EXPENDITURE IN TOTAL HEALTH EXPENDITURE DECLINES FROM 62.6 PER CENT TO 39.4 PER CENT BETWEEN FY15 AND FY22
UNEMPLOYMENT RATE DECLINES TO 3.2 PER CENT IN 2023-24 (JULY-JUNE) FROM 6.0 PER CENT IN 2017-18 (JULY-JUNE)
COLLABORATIVE EFFORT BETWEEN GOVERNMENT, PRIVATE SECTOR, AND ACADEMIA ESSENTIAL TO MINIMISE ADVERSE AI SOCIETAL EFFECTS
“The global economy grew by 3.3 per cent in 2023. The International Monetary Fund (IMF) projects global growth to average around 3.2 per cent over the next five years, which is modest by historical standards”, says the Economic Survey 2024-25 tabled by Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman, in the Parliament today.
As per the Survey, the global economy exhibited steady yet uneven growth across regions in 2024. A notable trend was the slowdown in global manufacturing, especially in Europe and parts of Asia, due to supply chain disruptions and weak external demand. In contrast, the services sector performed better, supporting growth in many economies. Inflationary pressures eased in most economies. However, services inflation has remained persistent, notes the Survey.
The Survey highlights that, despite global uncertainty, India has displayed steady economic growth. India’s real GDP growth of 6.4 per cent in FY25 remains close to the decadal average.
From an aggregate demand perspective, private final consumption expenditure at constant prices is estimated to grow by 7.3 per cent, driven by a rebound in rural demand.
On the supply side, the real gross value added (GVA) is estimated to grow by 6.4 per cent. The agriculture sector is expected to rebound to a growth of 3.8 per cent in FY25. The industrial sector is estimated to grow by 6.2 per cent in FY25. Strong growth rates in construction activities and electricity, gas, water supply and other utility services are expected to support industrial expansion. Growth in the services sector is expected to remain robust at 7.2 per cent, driven by healthy activity in financial, real estate, professional services, public administration, defence, and other services.
Keeping in mind the upsides and downsides to growth, the Survey expects the real GDP growth in FY26 to be between 6.3 and 6.8 per cent.
The Chapter on the Medium-Term Outlook elaborates on the global factors and the importance of strengthening the levers of domestic growth in the context of heightened risks due to global concerns about economic policies and trade policy uncertainties.
To realize the aspirations of Viksit Bharat by 2047, it is important that the medium-term growth outlook of India be assessed in the context of emerging global realities of Geo-Economic Fragmentation (GEF), Chinese manufacturing prowess, and global dependency on China for energy transition efforts. The Survey puts forth a way forward to reinvigorate the internal engines and domestic levers of growth by focusing on one central element of systemic deregulation, which will enable a paradigm of economic freedom to businesses of individuals and organizations to pursue legitimate economic activity with ease. The Survey stresses that the reforms and economic policy must now be on systematic deregulation under Ease of Doing Business 2.0 so that it encourages creation of a viable Mittelstand, i.e. India’s SME sector.
The Economic Survey 2024-25 notes that agriculture growth remained steady in first half of FY25, with Q2 recording a growth rate of 3.5 per cent, marking an improvement over the previous four quarters. Healthy Kharif production, above-normal monsoons, and an adequate reservoir level supported agricultural growth. The total Kharif food grain production is estimated at a record 1647.05 lakh metric tonnes (LMT) in 2024-25, higher by 5.7 per cent compared to 2023-24 and 8.2 per cent higher than the average food grain production in the past five years.
The industrial sector grew by 6 per cent in first half of FY25, and is estimated to grow by 6.2 per cent in FY25. Q1 saw a strong growth of 8.3 per cent, but growth moderated in Q2 due to three key factors. First, manufacturing exports slowed significantly due to weak demand from destination countries, and aggressive trade and industrial policies in major trading nations. Second, the above average monsoon had mixed effects – while it replenished reservoirs and supported agriculture, it also disrupted sectors like mining, construction, and, to some extent, manufacturing. Third, the variation in the timing of festivities between September and October in the previous and current years led to a modest growth slowdown in Q2 FY25.
Despite various challenges, India continues to register the fastest growth in manufacturing PMI, stated the Survey. The latest Manufacturing PMI for December 2024 remained well within the expansionary zone, driven by new business gains, robust demand, and advertising efforts.
The services sector continues to perform well in FY25, emphasizes the Survey. A notable growth in Q1 and Q2 resulted in 7.1 per cent growth in first half of FY25. Across sub-categories, all the sub-sectors have performed well. India’s services export growth surged to 12.8 per cent during April–November FY25, up from 5.7 per cent in FY24.
The Economic Survey states that growth process has been ably supported by stability on fronts such as inflation, fiscal health, and external sector balance. On inflation, the Survey states that retail headline inflation has softened from 5.4 per cent in FY24 to 4.9 per cent in April – December 2024. Food inflation, measured by the Consumer Food Price Index (CFPI), has increased from 7.5 per cent in FY24 to 8.4 per cent in FY25 (April-December), primarily driven by a few food items such as vegetables and pulses. India’s consumer price inflation will gradually align with the target of around 4 per cent in FY26 as per RBI and IMF.
Capital expenditure (capex), as a per cent of the total expenditure of the union, has continuously improved from FY21 to FY24. After the general elections, union government capex has grown by 8.2 per cent during July – November 2024 YoY, the Survey says.
Despite the gross tax revenue (GTR) increasing by 10.7 per cent YoY during April-November 2024, the tax revenue retained by the Union, net of devolution to the states, hardly increased, says the Survey. As of November, the deficit indicators of the union were comfortably placed, leaving ample room for developmental and capital expenditure in the rest of the year.
According to the Survey, the GTR of the union and own tax revenue (OTR) of the states have increased at comparable pace during the period April – November 2024. The revenue expenditure of the states grew at 12 per cent (YoY) during April to November 2024, with subsidies and committed liabilities registering a growth of 25.7 per cent and 10.4 per cent, respectively.
The Survey observes that stability in the banking sector is underscored by declining asset impairments, robust capital buffers, and strong operational performance. The gross non-performing assets (NPAs) in the banking system have declined to a 12-year low of 2.6 per cent of gross loans and advances. The capital-to-risk-weighted assets ratio (CRAR) for Schedule Commercial Banks stands at 16.7 per cent as of September 2024, well above the norm, says the Survey.
Emphasizing that the external sector stability is safeguarded by services trade and record remittances, the Economic Survey quotes that India’s merchandise exports grew by 1.6 per cent YoY in April – December 2024. Merchandise imports rose by 5.2 per cent. India’s robust services exports have propelled the country to secure the seventh-largest share in global services exports, underscoring its competitiveness.
In addition to the services trade surplus, remittances from abroad led to a healthy net inflow of private transfers. India was the top recipient of remittances in the world, driven by an uptick in job creation in OECD economies. These two factors combined to ensure that India’s current account deficit (CAD) remains relatively contained at 1.2 per cent of GDP in Q2 FY25, as per the Survey.
Gross Foreign Direct Investment inflows recorded a revival in FY25, increasing from USD 47.2 billion in the first eight months of FY24 to USD 55.6 billion in the same period of FY25, a YoY growth of 17.9 per cent, says the Survey. 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 Economic Survey states that as a result of stable capital flows, 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 as on 3 January 2025. India’s forex reserves are sufficient to cover 90 per cent of external debt and provide an import cover of more than ten months, thereby safeguarding against external vulnerabilities.
The Economic Survey highlights continued good performance on the employment front. It states that India’s labour market growth in recent years has been supported by post-pandemic recovery and increased formalisation. The unemployment rate for individuals aged 15 years and above has steadily declined from 6 per cent in 2017-18 to 3.2 per cent in 2023-24. The labour force participation rate (LFPR) and the worker-to-population ratio (WPR) have also increased.
The Survey also mentions that for India, a services-driven economy with a youthful and adaptable workforce, the adoption of AI offers the potential to support economic growth and improve labour market outcomes. Prioritising education and skill development will be crucial to equipping workers with the competencies needed to thrive in an AI-augmented landscape. The Survey brings out the fact that there are at present barriers to large-scale AI adoption, leading to a window for policymakers to act. The Economic Survey calls upon for collaborative effort between government, private sector, and academia to minimise the adverse societal effects of AI-driven transformation in the labour sector.
On infrastructure front, the Economic Survey highlights the need for continued step-up of infrastructure investment over next two decades to sustain a high growth. Under railway connectivity, 2031 km of railway network was commissioned between April and November, 2024, and 17 new pairs of Vande Bharat trains were introduced between April and October 2024. Port capacity improved significantly in FY25, leading to improvements in operational efficiency and reduction in average container turnaround time in major ports from 48.1 hours in FY24 to 30.4 hours during FY25 (Apr-Nov).
The Economic Survey underscores the government of India’s efforts to boost renewable energy in the country and green investments through schemes, policies, financial incentives and regulatory measures such as PM – Surya Ghar: Muft Bijli Yojana, National Bioenergy Programme, National Green Hydrogen Mission and PM-KUSUM. The capacity addition in solar and wind power has lead to a 15.8 per cent year-on-year increase in renewable energy capacity by December 2024.
The Government social services expenditure has witnessed an increase of compounded annual growth rate of 15% (combined for centre and states) from FY 21 to FY 25. The Gini coefficient, which is a measure of inequality in consumption expenditure, has been declining in recent years (For rural areas it declined to 0.237 in 2023-24 from 0.266 in 2022-23 and for urban areas, it fell to 0.284 in 2023-24 from 0.314 in 2022-23), reflecting positive impact of Government’s initiatives in reshaping income distribution. On the school education front, the government is working toward meeting the objectives of National Education Policy 2020 through a range of programmes and schemes. These interalia include the Samagra Shiksha Abhiyan, DIKSHA, STARS, PARAKH, PM SHRI, ULLAS, PM POSHAN, etc, as per the Survey.
In the total health expenditure of the country between FY15 and FY22, the Survey quotes the share of government health expenditure has increased from 29.0 per cent to 48.0 per cent. During the same period, the share of out-of-pocket expenditure in total health expenditure declined from 62.6 per cent to 39.4 per cent.
Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant sector of the Indian economy, noted the Survey. To provide equity funding to MSMEs with the potential to scale up, the government launched the Self-Reliant India Fund with a corpus of ₹50,000 crore.
The Survey, says that reducing excessive regulatory burdens, governments can help businesses become more efficient, reduce costs, and unlock new growth opportunities. Regulations increase the cost of all operational decisions in firms, the Economic Survey adds. It has outlined a three-step process for states to systematically review regulations for their cost-effectiveness. The steps include identifying areas for deregulation, thoughtfully comparing the regulations with other states and countries and estimating the cost of each of these regulations on individual enterprises. The Survey highlights that Ease of Doing Business (EoDB) 2.0 should be a state government-led initiative focused on fixing the root causes behind the unease of doing business. It mentions that in the next phase for EoDB, states must break new ground on liberalizing standards and controls, setting legal safeguards for enforcement, reducing tariffs and fees, and applying risk-based regulation.
As the Survey underscores, looking ahead, India’s economic prospects for FY26 are balanced. Headwinds to growth include elevated geopolitical and trade uncertainties and possible commodity price shocks. Domestically, the translation of order books of private capital goods sector into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting growth. Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation and a stable macro-economic environment provides an upside to near-term growth. Overall, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential.
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Ministry of Finance
HIGHLIGHTS OF ECONOMIC SURVEY 2024-25
Posted On: 31 JAN 2025 2:20PM by PIB Delhi
INDIA’S REAL GDP AND GVA GROWTH ESTIMATED AT 6.4 PER CENT IN FY25 (FIRST ADVANCE ESTIMATES)
THE REAL GDP GROWTH TO GROW BETWEEN 6.3 AND 6.8 PER CENT IN FY26
THRUST ON GRASSROOTS-LEVEL STRUCTURAL REFORMS AND DEREGULATION TO BOOST MEDIUM-TERM GROWTH POTENTIAL AND GLOBAL COMPETITIVENESS
GEO-ECONOMIC FRAGMENTATION (GEF) IS REPLACING GLOBALIZATION LEADING TO IMMINENT ECONOMIC REALIGNMENTS AND READJUSTMENTS
FOCUS OF REFORMS AND EASE OF DOING BUSINESS 2.0 TO CREATE INDIA’S MITTELSTAND, I.E. INDIA’S SME SECTOR
TO MEET THE REQUIREMENTS OF INFRASTRUCTURE PRIVATE SECTOR PARTICIPATION WILL BE CRUCIAL
CAPEX IMPROVED CONTINUOUSLY FROM FY21 TO FY24 AND POST GENERAL ELECTIONS, IT GREW YOY BY 8.2 PER CENT
CAPITAL EXPENDITURE ON KEY INFRASTRUCTURE SECTORS GROWN AT A RATE OF 38.8 PER CENT FROM FY20 TO FY24
RBI AND THE IMF PROJECT INDIA’S CONSUMER PRICE INFLATION WILL ALIGN WITH TARGET OF 4 PER CENT IN FY26
RETAIL HEADLINE INFLATION SOFTENED FROM 5.4 PER CENT IN FY24 TO 4.9 PER CENT IN APRIL –DECEMBER 2024
BANK CREDIT HAS GROWN AT A STEADY RATE WITH CREDIT GROWTH CONVERGING TOWARDS DEPOSIT GROWTH
GNPA OF SCHEDULED COMMERCIAL BANKS DECLINED TO A 12-YEAR LOW OF 2.6 PER CENT
₹3.6 LAKH CRORE REALIZED IN RESOLUTION OF 1,068 PLANS TILL SEPTEMBER 2024 UNDER INSOLVENCY AND BANKRUPTCY CODE
₹11.1 LAKH CRORE MOBILISED THROUGH EQUITY AND DEBT TILL DECEMBER 2024, A 5% INCREASE THAN PREVIOUS YEAR
BSE STOCK MARKET CAPITALISATION TO GDP RATIO STOOD AT 136 PER CENT, FAR HIGHER THAN CHINA (65 PER CENT) AND BRAZIL (37 PER CENT)
OVERALL EXPORTS GREW BY 6 PER CENT, SERVICES BY 11.6 PER CENT (YOY) IN THE FIRST NINE MONTHS OF FY25
INDIA RANKS 2ND LARGEST EXPORTER IN THE WORLD IN ‘TELECOMMUNICATIONS, COMPUTER, & INFORMATION SERVICES’, AS PER UNCTAD
FOREX AT USD 640.3 BILLION, SUFFICIENT TO COVER 10.9 MONTHS OF IMPORTS AND 90 PER CENT OF EXTERNAL DEBT
GOVERNMENT‘S SPACE VISION 2047 INCLUDES GAGANYAAN MISSION AND CHANDRAYAAN-4 LUNAR SAMPLE RETURN MISSION
DRASTIC REDUCTION ON SMARTPHONE IMPORTS, 99 PER CENT NOW MANUFACTURED DOMESTICALLY: ECONOMIC SURVEY 2024-25
WIPO REPORT 2022 – INDIA RANKS SIXTH AMONG THE TOP 10 PATENT FILING OFFICES GLOBALLY
₹50,000 CRORE SELF-RELIANT INDIA FUND LAUNCHED TO PROVIDE EQUITY FUNDING TO MSMES
INDIA’S SERVICES EXPORT GROWTH SURGED TO 12.8 PER CENT DURING APRIL–NOVEMBER FY25, UP FROM 5.7 PER CENT IN FY24
THE TOURISM SECTOR’S CONTRIBUTION TO GDP RETURNED TO ITS PRE-PANDEMIC LEVEL OF 5 PER CENT IN FY23
AGRICULTURE AND ALLIED ACTIVITIES SECTOR CONTRIBUTES APPROXIMATELY 16 PER CENT OF THE COUNTRY’S GDP FOR FY24 (PE) AT CURRENT PRICES
KHARIF FOODGRAIN PRODUCTION IS EXPECTED TO REACH 1647.05 LMT, AN INCREASE OF 89.37 LMT FROM PREVIOUS YEAR
FISHERIES SECTOR SHOWN HIGHEST CAGR OF 8.7 PER CENT, FOLLOWED BY LIVESTOCK WITH A CAGR OF 5.8 PER CENT
INSTALLED ELECTRICITY GENERATION CAPACITY FROM NON-FOSSIL FUEL SOURCE ACCOUNTS FOR 46.8 PER CENT OF THE TOTAL CAPACITY
ADDITIONAL CARBON SINK OF 2.29 BILLION TONNES CO2 EQUIVALENT HAS BEEN CREATED BETWEEN 2005 AND 2023
BY 2030, LIFE MEASURES COULD SAVE CONSUMERS AROUND USD 440 BILLION GLOBALLY
SOCIAL SERVICES EXPENDITURE REGISTERS AN ANNUAL GROWTH RATE OF 15 PER CENT FROM FY 21 TO FY 25
GOVERNMENT HEALTH EXPENDITURE INCREASES FROM 29.0 PER CENT TO 48.0 PER CENT; EXPENDITURE BY PEOPLE ON HEALTH DECLINES FROM 62.6 PER CENT TO 39.4 PER CENT
UNEMPLOYMENT RATE DECLINES TO 3.2 PER CENT IN 2023-24 FROM 6.0 PER CENT IN 2017-18
GROWING DIGITAL ECONOMY AND RENEWABLE ENERGY SECTORS PROVIDE ENHANCED OPPORTUNITIES FOR JOB CREATION, ESSENTIAL FOR ACHIEVING VIKSIT BHARAT’S VISION
PM-INTERNSHIP SCHEME EMERGES AS TRANSFORMATIVE CATALYST FOR EMPLOYMENT GENERATION
BARRIERS TO LARGE-SCALE AI ADOPTION PERSIST IN PRESENT, LEADING TO A WINDOW FOR POLICYMAKERS TO ACT
COLLABORATIVE EFFORT BETWEEN GOVERNMENT, PRIVATE SECTOR, AND ACADEMIA ESSENTIAL TO MINIMISE ADVERSE SOCIETAL EFFECTS OF AI-DRIVEN TRANSFORMATION
Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman presented the Economic Survey 2024-25 in the Parliament today. The highlights of the survey are as follows;
State of the Economy: Getting Back into the Fast Lane
1. India’s real GDP growth is estimated at 6.4 per cent in FY25 (as per first advance estimates of national income), which equates nearly to its decadal average.
2. Real gross value added (GVA) is also estimated to grow by 6.4 per cent FY25.
3. The global economy on an average grew by 3.3 per cent in 2023 against the IMF projection of 3.2 per cent growth in the next five years.
4. The real GDP growth in FY26 is expected to grow between 6.3 and 6.8 per cent, keeping in mind the upsides and downsides to growth.
5. Thrust on grassroots-level structural reforms and deregulation to reinforce the medium-term growth potential and boost global competitiveness of Indian economy.
6. Geopolitical tensions, ongoing conflicts and global trade policy risks continue to pose significant challenges to the global economic outlook.
7. Retail headline inflation has softened from 5.4 per cent in FY24 to 4.9 per cent in April –December 2024.
8. Capital expenditure (CAPEX) improved continuously from FY21 to FY24. Post general elections, CAPEX grew YOY by 8.2 per cent during July –November 2024.
9. India accounts for seventh-largest share in global services exports, underscoring India’s global competitiveness in the sector.
10. During April to December 2024, non-Petroleum and non-Gems & Jewellery exports went up by 9.1 per cent reflecting resilience of India’s merchandise exports amid volatile global conditions.
Monetary and Financial Sector Developments: The Card and the Horse
1. Bank credit has grown at a steady rate with credit growth converging towards deposit growth.
2. Profitability of Scheduled Commercial Banks improved, reflected in a fall in gross non-performing assets (GNPAs) and rise in capital to risk weighted asset ratio (CRAR).
3. Credit growth outpaced nominal GDP growth for two successive years. The credit-GDP gap narrowed to (-) 0.3 per cent in Q1 of FY25 from (-) 10.3 per cent in Q1 of FY23, indicating sustainable bank credit growth.
4. Banking sector exhibits improvement in asset quality, robust capital buffers, and strong operational performance.
5. The gross non-performing assets (GNPAs) of Scheduled Commercial Banks declined to a 12-year low of 2.6 per cent of gross loans and advances at the end of September 2024.
6. Under Insolvency and Bankruptcy Code, ₹3.6 lakh crore realized in resolution of 1,068 plans till September 2024. It amounts to 161 per cent against the liquidation value and 86.1 per cent of the fair value of the assets involved.
7. Indian stock markets outperformed its emerging market peers despite election-driven market volatility challenges.
8. The total resource mobilisation from primary markets (equity and debt) stands at ₹11.1 lakh crore from April to December 2024, five per cent more than the amount mobilised during FY24.
9. BSE stock market capitalisation to GDP ratio stood at 136 per cent at the end of December 2024, far higher than other Emerging Market Economies like China (65 per cent) and Brazil (37 per cent).
10. India’s insurance market continued its upward trajectory, with total insurance premiums growing by 7.7 per cent in FY24, reaching ₹11.2 lakh crore.
11. India’s pension sector experienced significant growth, with the total number of pension subscribers growing by 16 per cent (YoY) as of September 2024.
External Sector: Getting FDI Right
1. India’s external sector continues to display resilience amidst global uncertainties and headwinds.
2. Overall exports (merchandise + services) grew by 6 per cent (YOY) in the first nine months of FY25. Services sector by 11.6 per cent during the same time.
3. India commands 10.2 per cent of the global export market in ‘Telecommunications, Computer, & Information Services’, ranking 2nd largest exporter in the world, as per UNCTAD.
4. India’s current account deficit (CAD) stood at 1.2 per cent of GDP in Q2 of FY25, supported by rising net services receipts and an increase in private transfer receipts.
5. Gross Foreign Direct Investment (FDI) inflows recorded a revival in FY25, increasing from USD 47.2 billion in the first eight months of FY24 to USD 55.6 billion in the same period of FY25, a YoY growth of 17.9 per cent.
6. India’s FOREX reserves stood at USD 640.3 billion as of the end of December 2024, sufficient to cover 10.9 months of imports and approximately 90 per cent of the country’s external debt.
7. India’s external debt remained stable over the past few years, with the external debt to GDP ratio standing at 19.4 per cent at the end of September 2024.
Prices and Inflation: Understanding the Dynamics
1. As per the IMF, the global inflation rate moderated to 5.7 per cent by 2024 from its peak of 8.7 per cent in 2022.
2. Retail inflation in India saw a reduction from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December 2024).
3. RBI and the IMF project India’s consumer price inflation will gradually align with the target of around 4 per cent in FY26.
4. Development of climate-resilient crop varieties and enhanced farming practices are essential to mitigate the effects of extreme weather events and achieve long-term price stability.
Medium-Term Outlook: Deregulation Drives Growth
1. Indian economy is in the middle of a change that represents an unprecedented economic challenge and opportunity. Geo-Economic Fragmentation (GEF) is replacing globalization leading to imminent economic realignments and readjustments.
2. To realize the vision of Viksit Bharat by 2047 India will need to achieve a growth rate of around 8 per cent at constant prices, on average, for about a decade or two.
3. The Medium-term growth outlook for India must consider the new global realities – GEF, China’s manufacturing prowess, and dependency of efforts for energy transition on China.
4. India to focus on systematic deregulation to reinvigorate the domestic levers of growth and empower individuals and organisations to pursue legitimate economic activity with ease.
5. Systemic deregulation or enhancing economic freedom for individuals and small businesses is arguably the most important policy priority to bolster India’s medium-term growth prospects.
6. Focus of reforms and economic policy must now be on systematic deregulation under Ease of Doing Business 2.0 and creation of a viable Mittelstand, i.e. India’s SME sector.
7. In the next step, States must work on liberalising standards and controls, setting legal safeguards for enforcement, reducing tariffs and fees, and applying risk-based regulation.
Investment and Infrastructure: Keeping it Going
1. The central focus of the Government in the last five years was on increasing public spending on infrastructure, and speeding up approvals and resource mobilization.
2. The Union Government‘s capital expenditure on key infrastructure sectors has grown at a rate of 38.8 per cent from FY20 to FY24.
3. Under railway connectivity, 2031 km of railway network was commissioned between April and November, 2024, and 17 new pairs of Vande Bharat trains were introduced between April and October 2024.
4. Under road network, 5853 km of National Highways was constructed in FY25 (April-Dec).
5. Under National Industrial Corridor Development Programme, a total of 383 plots covering 3788 acres have been allotted for industrial use for various sectors in phase 1.
6. Operational efficiency improved reduction in average container turnaround time in major ports from 48.1 hours in FY24 to 30.4 hours during FY25 (Apr-Nov), significantly improving port connectivity.
7. A 15.8 per cent year-on-year increase in renewable energy capacity of solar and wind power by December 2024.
8. The share of renewable energy in India’s total installed capacity now stands at 47 per cent.
9. Government’s schemes like the DDUGJY and the SAUBHAGYA improved electricity access in rural areas, electrifying 18,374 villages and providing electricity to 2.9 crore households.
10 The government’s digital connectivity initiatives have gained traction, particularly with the rollout of 5G services across all states and union territories by October 2024.
11. Efforts to provide 4G mobile services to remote areas under the Universal Service Obligation Fund (now Digital Bharat Nidhi) have made significant strides, with over 10,700 villages covered by December 2024.
12. Under the Jal Jeevan Mission, over 12 crore families have gained access of piped drinking water since its launch.
13. Under Phase II of the Swachh Bharat Mission-Grameen, during April to November 2024, 1.92 lakh villages were incrementally declared ODF Plus under the model category, taking the total number of ODF Plus villages to 3.64 lakh.
14. In urban areas, the Pradhan Mantri Awas Yojana has completed over 89 lakh houses.
15. City transportation network is expanding rapidly, with metro and rapid rail systems operational or under construction in 29 cities, covering over 1,000 kilometers.
16. Real Estate (Regulation & Development) Act, 2016, ensured regulation and transparency of Real Estate sector. By January 2025, over 1.38 lakh real estate projects registered, and 1.38 lakh complaints were resolved.
17. India currently operates 56 active space assets. The government‘s Space Vision 2047 includes ambitious projects like the Gaganyaan mission and the Chandrayaan-4 Lunar Sample Return Mission.
18. Public sector investment alone cannot meet the requirements of infrastructure, and private sector participation will be crucial to bridge the gap.
19. The government has created mechanisms such as the National Infrastructure Pipeline and National Monetisation Pipeline to facilitate private sector involvement in infrastructure.
Industry: All about Business Reforms
1. The industrial sector expected to grow by 6.2 per cent in FY-25 (first advance estimates), driven by robust growth in electricity and construction.
2. The government has been actively promoting Smart Manufacturing and Industry 4.0, supporting the establishment of SAMARTH Udyog centres.
3. In FY24, the Indian automobile domestic sales grew by 12.5 per cent.
4. The domestic production of electronic goods has grown at a CAGR of 17.5 per cent from FY15 to FY24.
5. 99 per cent smartphones now manufactured domestically, drastically reducing India’s dependence on imports.
6. The total annual turnover of pharmaceuticals in FY24 was ₹4.17 lakh crore, growing at an average rate of 10.1 per cent in the last five years.
7. As per the WIPO Report 2022, India ranks sixth among the top 10 patent filing offices globally.
8. Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant sector of the Indian economy.
9. To provide equity funding to MSMEs with the potential to scale up, the government launched the Self-Reliant India Fund with a corpus of ₹50,000 crore.
10. The government is implementing the Micro and Small Enterprises-Cluster Development Programme to develop clusters across the country.
Services -New Challenges for the Old War Horse
1. The service sector’s contribution to total GVA has risen from 50.6 per cent in FY14 to 55.3 per cent in FY25 (First Advance Estimates).
2. The average growth rate of the services sector was 8 per cent in the pre-pandemic years (FY13 -FY20). It stood at 8.3 per cent in the post-pandemic period (FY23–FY25).
3. India held a 4.3 per cent share in global services exports in 2023, ranking seventh worldwide.
4. India’s services export growth surged to 12.8 per cent during April–November FY25, up from 5.7 per cent in FY24.
5. Information and computer-related services grew at a trend rate of 12.8 per cent over the last decade (FY13–FY23), increasing their share of overall GVA from 6.3 per cent to 10.9 per cent.
6. Indian Railways recorded an 8 per cent growth in passenger traffic originating in FY24. Revenue-earning freight in FY24 grew by 5.2 per cent.
7. The tourism sector’s contribution to GDP returned to its pre-pandemic level of 5 per cent in FY23.
Chapter-9 Agriculture and Food Management: Sector of the Future
1. The ‘Agriculture and Allied Activities‘ sector contributes approximately 16 per cent of the country’s GDP for FY24 (PE) at current prices.
2. High-value sectors like horticulture, livestock, and fisheries have become key drivers of overall agricultural growth.
3. Kharif foodgrain production for 2024 is expected to reach 1647.05 Lakh Metric Tonnes (LMT), an increase of 89.37 LMT from the previous year.
4. For the fiscal year 2024-25, the MSP for Arhar and Bajra has been increased by 59 per cent and 77 per cent over the weighted average cost of production, respectively.
5. The fisheries sector has shown the highest compound annual growth rate (CAGR) of 8.7 per cent, followed by livestock with a CAGR of 8 per cent.
6. National Food Security Act (NFSA) 2013 and the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) marked a fundamental shift in the approach to food security.
7. The provision of free food grains under PMGKAY for another five years, reflects the long-term commitment of Govt towards food and nutrition security.
8. As of 31st October, over 11 crore farmers have benefitted under PM-KISAN, while 23.61 lakh farmers are enrolled under PM Kisan Mandhan.
Climate & Environment: Adaptation Matters
1. India’s ambition to achieve developed nation status by 2047 is fundamentally anchored in the vision of inclusive and sustainable development.
2. India has installed electricity generation capacity of 2,13,701 megawatts from non-fossil fuel sources, which accounts for 46.8 per cent of the total capacity as of 30 November 2024.
3. As per the Forest Survey of India 2024 an additional carbon sink of 2.29 billion tonnes CO2 equivalent has been created between 2005 and 202
4. The India-led global movement, Lifestyle for Environment (LiFE), aims to enhance the country’s sustainability efforts.
5. By 2030, it is estimated that LiFE measures could save consumers around USD 440 billion globally through reduced consumption and lower prices.
Social Sector -Extending reach and driving empowerment
1. The social services expenditure of the government (combined for Centre and States) increased at a compound annual growth rate of 15 per cent from FY21 to FY 25.
2. Gini coefficient, a measure of inequality in consumption expenditure, is declining. For rural areas it declined to 0.237 in 2023-24 from 0.266 in 2022-23, and for urban areas, it fell to 0.284 in 2023-24 from 0.314 in 2022-23.
3. Various fiscal policies of the government are aiding in reshaping the income distribution.
4. Government health expenditure increases from 29.0 per cent to 48.0 per cent; share of out-of-pocket expenditure in total health expenditure declines from 62.6 per cent to 39.4 per cent, reducing financial hardship endured by households.
5. The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) has played a decisive role in the significant reductions in expenditure with over ₹1.25 lakh crore in savings being recorded.
6. The strategy of ―Localisation of Sustainable Development Goals (SDGs) has been adopted to ensure that budgets at the Gram Panchayat levels align with the SDG objectives.
Employment and Skill Development: Existential priorities
1. Indian labour market indicators have improved with unemployment rate declining to 3.2 per cent in 2023-24 (July-June) from 6.0 per cent in 2017-18 (July-June).
2. With around 26 per cent of the population in the age group of 10-24 years, India stands at the cusp of a unique demographic opportunity, as one of the youngest nations globally.
3. To give a fillip to women’s entrepreneurship, the government has launched several initiatives in terms of easier access to credit, marketing support, skill development, and support to women start-ups, etc.
4. The growing digital economy and renewable energy sectors are providing enhanced opportunities for job creation, essential for achieving the Viksit Bharat’s vision.
5. The government is establishing a resilient and responsive skilled ecosystem to keep pace with emerging global trends such as automation, generative AI, digitalisation, and the effects of climate change.
6. The Government has implemented measures to boost employment, foster self-employment, and promote worker welfare.
7. The recently launched PM-Internship Scheme is emerging as a transformative catalyst for employment generation.
8. The net payroll additions under EPFO have more than doubled in the past six years, signalling healthy growth in formal employment.
Labour in the AI Era: Crisis or Catalyst?
1. Developers of Artificial Intelligence (AI) promise to usher in a new age, where a bulk of the economically valuable work is automated.
2. AI is anticipated to surpass human performance in critical decision-making across various fields, including healthcare, research, criminal justice, education, business, and financial services.
3. Barriers to large-scale AI adoption persist in the present, which include concerns over reliability, resource inefficiencies, and infrastructure deficits. These challenges, along with AI’s experimental nature, create a window for policymakers to act.
4. Fortunately, due to AI presently being in its infancy, India is afforded the time necessary to strengthen its foundations and mobilise a nation-wide institutional response.
5. Leveraging its young, dynamic, and tech-savvy population, India has the potential to create a workforce that can utilise AI to augment their work and productivity.
6. The future revolves around ‘Augmented Intelligence’, where the workforce integrates both human and machine capabilities. This approach aims to enhance human potential and improve overall efficiency in job performance, ultimately benefiting society as a whole.
7. Collaborative effort between government, private sector, and academia essential to minimise adverse societal effects of AI-driven transformation.
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