Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2024-25 in Parliament on January 31, 2025, setting the stage for the Union Budget scheduled for February 1. This document provides a comprehensive assessment of India’s economic landscape, highlighting key indicators such as Gross Domestic Product (GDP), inflation, foreign direct investment (FDI), manufacturing, fiscal deficit, employment trends, and foreign exchange reserves.
Despite global economic headwinds, India has demonstrated steady growth, with real GDP expanding by 6.4% in FY25, closely aligning with its decadal average. The Survey projects GDP growth in FY26 to range between 6.3% and 6.8%, indicating sustained economic resilience. This positive outlook is driven by strong domestic consumption, robust services sector performance, and rising investments.
While inflation remains a key concern, the Survey indicates that retail inflation, as measured by the Consumer Price Index (CPI), averaged 5.4% during FY25 (April-December). Although this remains within the Reserve Bank of India’s (RBI) upper tolerance limit of 6%, it surpasses the central bank’s comfort level of 4%.
Food inflation, recorded at 8.4%, rose from 7.5% in the previous fiscal year, mainly driven by supply chain disruptions affecting essentials like vegetables, pulses, onions, and tomatoes. The government is expected to implement strategic measures to curb price volatility and ensure stable food supply in the coming months.
Foreign Direct Investment (FDI) continues to play a crucial role in India’s economic expansion, reflecting investor confidence in the country’s robust growth potential. The Survey underscores the importance of policy reforms, infrastructure development, and ease of doing business initiatives, which have contributed to attracting higher FDI inflows. However, global trade slowdowns and geopolitical tensions pose challenges, necessitating adaptive strategies to sustain investment momentum.
India’s Manufacturing Purchasing Managers’ Index (PMI) shows that the sector is on a recovery path, yet it remains slightly below its pre-pandemic trajectory. Supply chain disruptions and slowing global demand have impacted industrial output, but with continued reforms and policy support, a revival in manufacturing activity is expected in the near term.
The Periodic Labour Force Survey (PLFS) 2023-24 reports steady improvement in India’s labour market. The unemployment rate among individuals aged 15 and above has declined significantly from 6% in 2017-18 to 3.2% in 2023-24. This decline highlights post-pandemic recovery and increased formalisation of the workforce. With rising participation in both rural and urban job markets, India’s employment scenario continues to gain strength, positioning the economy for inclusive growth.
India’s foreign exchange reserves remain robust, serving as a financial buffer against external shocks. These reserves have played a critical role in maintaining rupee stability, boosting investor confidence, and ensuring macroeconomic resilience. As the global economic environment evolves, India’s ability to manage external vulnerabilities and sustain forex reserves will be essential.
The Economic Survey 2024-25 underscores the need for strategic policy interventions to maintain growth momentum and navigate global uncertainties. Key focus areas include:
- Boosting private and public investment to sustain long-term growth.
- Enhancing agricultural productivity to stabilize food inflation.
- Strengthening financial inclusion and digital transformation to support the evolving job market.
- Developing resilient supply chains to mitigate external disruptions.
With GDP growth projections remaining optimistic and employment indicators showing positive trends, the Indian economy is on track for sustainable expansion. The upcoming Union Budget 2025-26 will be instrumental in translating the Economic Survey’s insights into actionable policy measures, shaping India’s growth trajectory in the years ahead.
