What's in the Economic Survey 2024-25? Growth vs. Global Headwinds

The Indian economy is displaying remarkable resilience, charting a course of robust growth despite global economic uncertainties, according to the Economic Survey 2024-25, tabled in Parliament today. The survey paints a picture of an economy firing on multiple cylinders, with strong performances in services, construction, and agriculture, coupled with rising private consumption and capital formation.

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Economic Survey 2024-25: Key Sectors Driving India's Robust Growth

The survey projects real GVA growth of 6.4% for FY25, driven by a rebound in rural demand and a surge in private final consumption expenditure, which is estimated to reach its highest share of GDP since FY03. Gross fixed capital formation is also expected to see healthy growth. This positive outlook is underpinned by strong performances in key sectors. Construction has been a standout performer, soaring 15% above its pre-pandemic trend, fueled by infrastructure development and housing demand. The services sector continues its upward trajectory, led by financial, real estate, and professional services. Agriculture is also expected to contribute significantly, with a projected growth of 3.8% thanks to a normal monsoon and record Kharif food grain production.

Manufacturing Sector and Domestic Demand

While manufacturing has shown steady recovery, it is still slightly below its pre-pandemic trend, facing challenges from slowing global demand and supply chain disruptions. However, India continues to lead in manufacturing PMI growth, indicating underlying strength.

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The survey highlights the crucial role of domestic demand in driving growth, with private consumption expenditureand gross fixed capital formation playing pivotal roles. Rural demand is rebounding, as evidenced by NABARD’s survey showing increased consumption expenditure among rural households. Union government capex is also on the rise, further boosting economic activity.

External Trade and Financial Sector

On the external front, exports of goods and services have shown resilience, growing at a healthy pace. India’s current account deficit remains contained, thanks to robust remittance inflows and well-managed imports. Foreign exchange reserves remain healthy, providing a comfortable import cover.

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The financial sector is also showing signs of strength. Gross NPAs in the banking system have declined to a 12-year low, and bank credit to MSMEs is growing at a healthy pace. The Insolvency and Bankruptcy Code continues to improve the credit culture and facilitate faster resolution of stressed assets. Capital markets are buoyant, with India's share in global IPO listings surging. Investor participation is growing, and mutual fund investments are on the rise.

Inflation and Long-term Growth Prospects

The survey acknowledges the challenges posed by inflation but notes that headline inflation has softened in recent months, thanks in part to proactive government measures to manage food prices. Excluding the volatile TOP (Tomato, Onion, Potato) vegetables, both food and headline inflation are significantly lower.

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Looking ahead, the survey expresses optimism about India’s long-term growth prospects. The IMF projects India to become a USD 5 trillion economy by FY28 and reach USD 6.3 trillion by FY30. This translates to a robust annual nominal growth rate in dollar terms.

Infrastructure Development and Sectoral Progress

The Economic Survey emphasizes the government’s focus on infrastructure development, highlighting significant progress in railways, roads, ports, and aviation. The National Infrastructure Pipeline and asset monetization programs are driving investments in key sectors. The power sector is also witnessing expansion, with increased installed capacity and improved power supply. Renewable energy capacity is growing rapidly, contributing to India’s clean energy transition. The telecom sector is undergoing a transformation with the rollout of 5G services, enhancing connectivity and digital access. The Jal Jeevan Mission is making significant strides in providing access to safe drinking water to rural households.

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Economic Survey 2024-25: Infrastructure, Financial Strength, and Sectoral Growth in Focus

The Economic Survey 2024-25 paints a positive picture of the Indian economy, highlighting its resilience and growth potential. While acknowledging the challenges, the survey expresses confidence in India’s ability to navigate global headwinds and achieve its ambitious growth targets. The government’s focus on infrastructure, reforms, and prudent macroeconomic management is expected to pave the way for a sustained period of economic expansion.