Economic Survey 2024-25:
Key highlights and challenges the CEA presents
New Delhi, Jan 31, 2025
India's economy is expected to grow between 6.3 per cent and 6.8 per cent in FY26. Chief Economic Adviser believes India is on a steady growth path while globalisation is slowing down
Union Finance Minister Nirmala Sitharaman today presented the Economic Survey for 2024-25 on the first day of the Budget session. The Economic Survey is the most important document which reviews the country’s economic progress and challenges. It was prepared by the Chief Economic Adviser (CEA), V Anantha Nageswaran and his team.
According to the survey, India’s economy is expected to grow between 6.3 per cent and 6.8 per cent in FY26. Nageswaran mentioned that while India is on a steady growth path, while globalisation is slowing down. This change brings both challenges and new opportunities. To keep growing, India must focus on economic reforms and take advantage of its young workforce.
India’s strong economic foundations
Despite global economic uncertainties, India’s economy remains strong. The survey highlights that India’s financial and corporate sectors are in good shape. Strong government policies, steady private spending, and fiscal discipline are helping the economy stay resilient. However, a decline in globalisation could pose risks in the future.
Growth in the first half of FY25
During the first half (H1) of FY25, India’s economy grew by 6.2 per cent. In Q1 FY25, growth was 8.3 per cent, but it slowed down in Q2 FY25 due to challenges in the industrial sector.
The agriculture and services sectors performed well, while manufacturing faced difficulties because of weaker global demand and supply chain disruptions.
Why did growth slowdown in Q2?
The economy slowed in Q2 FY25 for three key reasons:
Lower exports – Demand for Indian goods decreased due to trade restrictions and weak global markets.
Monsoon impact – While good for agriculture, heavy rains disrupted mining, construction, and some manufacturing sectors.
Festivals timing – Some major festivals were celebrated later than usual, affecting economic activity in Q2.
India’s GDP performance in FY25
India’s GDP grew by 6.7 per cent in Q1 FY25 but slowed to 5.4 per cent in Q2 FY25. Overall, the first half of FY25 recorded 6 per cent growth, showing a mixed performance despite a strong start.
Rise in global IPO listings in FY25
According to the Economic Survey, India’s share in global IPO listings jumped to 30 per cent in 2024 from 17 per cent in 2023. This increase shows India’s growing importance in international finance. The Nifty 50 index has given an 8.8 per cent annual return over the last decade, making India’s stock market one of the best performers worldwide.
India’s long-term growth goals
India aims to become a developed nation (Viksit Bharat) by 2047. To achieve this, it needs to grow at 8 per cent per year for the next 20 years. However, global factors like trade policies and economic uncertainty could impact this goal.
India’s role in the global economy
India’s economy is benefiting from digital infrastructure, economic reforms, and strong business growth. By December 2024, India’s weight in the MSCI Emerging Markets Index reached 19.4 per cent, showing its increasing role in global markets. While India has outperformed China’s Shanghai Composite Index, it still lags behind the US NASDAQ and Dow Jones in returns.
Although the economic outlook is positive, India must prepare for global challenges that could affect its growth in the coming years.
Labour reforms and business growth
The Economic Survey mentions the successful labour reforms that have improved both business conditions and worker rights. These reforms aim to create more jobs and ensure sustainable employment growth.
Rural demand expected to improve
The survey predicts rural demand will increase, supported by a recovery in agriculture, lower food prices and a stable economy. However, global issues like trade tensions and rising commodity prices could still impact growth.
Strong remittance inflows
India’s economy benefits from money sent home by Indians working abroad. Remittances grew from $28.1 billion in Q2 FY24 to $31.9 billion in Q2 FY25. sThese inflows help keep India's economy stable despite global uncertainties.
Employment and electricity costs
The CEA emphasised the importance of job creation for economic growth. He also pointed out that high electricity prices in India hurt businesses compared to countries like Vietnam and Bangladesh, where industrial electricity costs are lower.
Infrastructure development in FY25
India has made significant progress in infrastructure over the last decade, including:
New trains and airports
Faster port operations (turnaround time reduced from 48 hours to 30 hours)
More power capacity and lower data costs
Improved telecom networks
These developments are making India’s economy more competitive on the global stage.
The Economic Survey 2024-25 presents an optimistic but cautious outlook for India. While the country has strong economic fundamentals, global uncertainties and trade challenges remain. To sustain growth, India must focus on policy reforms, infrastructure development, and job creation while staying prepared for external risks.
[The Business Standard]
