Economic Survey 2025 projects 6.4% GDP growth, highlights deregulation, MSME reforms, inflation control, and exports rise
The survey, authored by chief economic advisor (CEA) Anantha Nageswaran, however, provides the roadmap for reforms and growth, with an outlook for the next financial year, outlining the economic developments in various sectors, empowerment of small businesses by deregulating the MSME sector and agriculture reforms for farmers, which can be more efficient, reduce costs, and unlock new growth opportunities.
The projected figure of the survey, however, suggests that though Indian economy looks to remain sluggish in the next fiscal, the government has mostly emphasised the economic aspirations of becoming Viksit Bharat by the time of the centenary of independence, saying that India needs to achieve a growth rate of around 8 per cent at constant prices, on average, for about a decade or two. However, the GDP figure, despite missing the estimate provided in the survey for the last fiscal, remains close to the decadal average.
The survey highlighted that geopolitical risks remain elevated due to ongoing conflicts and tensions, posing significant risks to the global economic outlook and possible commodity price shocks. “Domestically, the translation of order books of the private capital goods sector into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting growth,” the survey noted.
Reacting to the survey, Nageswaran said in his presentation that time has come when there is a need to raise the “game”, such as deregulation for growth, augmenting internal capacities for growth, role of public sector in nation building and energy transition among all. “Changing global landscape is a key consideration as globalisation is a powerful force of change, altering global living standards, increasing connectivity and reducing costs,” the CEA added.
However, the survey said 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. Keeping in mind the upsides and downsides to growth, India expects the real GDP growth in FY26 to be between 6.3 and 6.8 per cent,” the survey said.
On the supply side, it said, 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, while 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,” it added.
The survey also stressed the need to encourage farmers to shift away from overproduced crops that deplete water resources and consume excessive electricity, adding that these reforms will help enhance land and labour productivity in the agriculture sector. “They need the right policies that nudge them away from impairing their soil fertility with an unbalanced application of fertilisers and from producing already overproduced crops, which deplete India's water resources and use up electricity excessively,” it noted.
It further said that 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,” it stated.
Retail inflation in India has reduced from 5.4 per cent in FY24 to 4.9 per cent in FY25 (April-December), aided by various government initiatives and monetary policy measures. “Decline in retail inflation is primarily due to decrease in core inflation by 0.9 percentage points between FY24 and FY25 (April-December), largely driven by core services inflation and decrease in fuel price inflation,” the survey said.
On food inflation, the survey pointed out that it has remained firm, driven by a few food items such as vegetables and pulses. “Contribution of vegetables and pulses to the overall inflation stood at 32.3 per cent in FY25 (April to December). When these items are excluded, the average food inflation rate for FY25 (Apr-Dec) was 4.3 per cent, which is 4.1 percent lower than the overall food inflation,” it added. #End#
Key Takeaways
* Despite global uncertainty, India's real GDP growth of 6.4% in FY25
* Inflation is coming under control; Core etail inflation softened from 5.4% FY24 to 4.9% during the April-December period of FY25
* Agriculture sector remains strong, consistently operating well above trend levels.
* Industrial sector has also found its footing above the pre-pandemic trajectory.
* The robust rate of growth in recent years has taken the services sector close to its trend levels.
* FPI positive overall, FDI shows signs of revival
* Forex reserves are strengthening; Forex reserves were at a high of $706 bn in Sept 2024 and stood at $640.3 billion by Dec, 2024, covering 89.9% of external debt.
* Banking and insurance sector is stable
* Export: India’s total exports (merchandise & services) rises 6% to $602.6 bn
Import: Total imports during the same period reached $682.2 billion, registering a growth of 6.9% on the back of steady domestic demand.
* MSME Credit growth remains strong, personal credit moderates; Deregulation needed for growth
* Infrastructure sector a key focus, but private players must participate more
