India Economic Survey 2024-25: Challenges and Growth Reforms

India’s Economic Survey 2024-25: Stagnating Growth, Need For Reform

Key Notes:

The GDP is expected to grow at a rate between 6.3 to 6.8% in the financial year 2025-26
Expected GDP Growth for the year 2024-25 is estimated to be 6.4%
Investing in infrastructure and digital economy is the most critical one
Required are Business friendly policies and deregulation to support higher growth rates
Employment generation along with skilling and AI adoption are crucial
Investment in Climate Innovation and Renewable energy adaption are increasing

Good Signs

Highlights GDP growth rate, Banking Sector Stability, FDI in manufacturing, increase in digital economy and expansion in infrastructural development as positive economic practices

Alarming Signs

Slow down in manufacturing, high level of unemployment, rise in inflation, global trade uncertainty, and climate change being a concern are the key problems that need to be addressed

Introduction: India’s Economic Outlook for 2024-25

According to a report by Economic Survey, presented by the Finance Minister Nirmala Sitharaman in the Lok Sabha, India’s economic future seems realistic. The report estimates the GDP growth from 2025 to 20226 falling between 6.3 to 6.8%, which is much lower than existing guesstimates. Similarly, during the fiscal period starting from 2024 to 2025, slow manufacturing coupled with weak investment remains a concern. The report claims the economy would slow down to 6.4%.

In spite of all these, the report expresses optimism. It claims that India’s economic fundamentals are solid and changes in regulations, infrastructure, and businesses will allow the country to grow rapidly again.The survey further cautions that India has to deal with emerging economies and an evolving global economy.

State of the Economy: Getting Back Into the Fast Lane

The concern is that there will be slower global demand and weak private investments in the country, and as such, India’s GDP growth for FY 2024-25 is estimated at 6.4%.

Consumption and investments suggests moderate, but consistent growth patterns.
India remains one of the countries that is achieving the highest growth rates, even with the uncertainties brought by inflation, trade wars, and geopolitical conflicts.
The focus of the government on capital expenditures and the infrastructure should improve growth rates for the economy in the long term.

Monetary and Financial Sector Developments

The banking industry of India is still exhibiting buoyancy with sizeable capital and decreasing Non-Performing Assets (NPAs).
Credit development of the private sector has improved recently, but funding constraints still beset micro and small businesses.

The stock market registered robust performance marked by unprecedented IPOs and growing participation of retail investors.
The RBI’s monetary policy remained geared towards achieving a fiscal point midway between inflation and growth while taking a guarded approach to interest rate changes.

External Sector: Correcting the Approach to FDI

There has been an increase in Foreign Direct Investment (FDI) into India, specifically in technology and renewable energy.
Services exports have helped, but trade deficits are still worrying.
International capital investment is being encouraged by the government through several schemes like ‘Make in India’ and PLI strategies.

The Indian currency has remained unaffected even with loading shifts in the world economy.

Prices and Inflation: Understanding the Dynamics

A major economic challenge continues to be inflation, particularly with respect to food prices and fuel.
Moderation of vegetables and energy costs has been volatile, affecting budgets of households.
Government measures such as stock limits, open market sales, and import policy have managed to control food inflation.
The RBI continues to maintain inflation at the target level by cutting interest rates and controlling liquidity with other devices.

Medium-Term Perspective – Economic growth enabled by deregulation

The survey marks a need for extreme economic deregulation to reduce bureaucracy and foster entrepreneurship.
Increasing foreign and domestic investments may be aided by easier compliance requirements and deletion of obsolete codes.

India’s digital governance accompanied by efforts to minimize bureaucratic hurdles improves ease of doing business in the country.

Investment and Infrastructure: Keeping It Going

Major investments are being made on roads, railways, airports, and digital connectivity which is the most important part of infrastructure investment.

There is progress in urban and rural infrastructure development through projects such as Smart Cities, Jal Jeevan Mission, and PMAY.
There is a concentration on solar and wind power projects investments that is rising in renewable energy.

Industry: All About Business Reforms

There is still industrial growth that is slow which poses as a challenge but the manufacturing industry is recovering.

There is a problem that needs to be fixed and that is to reduce corporate taxes and provide incentives for the industry as well as make reforms that are friendly to businesses.
Production and consequently exports are expected to rise due PLI schemes and MSME support programs.

Services: New Challenges for the Old War Horse

The services sector continues to dominate GDP but faces new challenges from AI, automation, and global competition.
India’s IT, finance, and digital economy are growing, but traditional service sectors need adaptation.

Investment on digital upskilling has to be increased to ensure service requirements of the world are met.

Agriculture and Food Management: The Sector of the Future

Climate dangers and low farmer revenues are the chief worries but agriculture is still an important pillar of the economy.
More funding is required to enhance irrigation systems, as well as, cold storage and supply chain facilities.
Expanding organic farming, micro-irrigation, and rural digitization for improvement

Climate & Environment: Adaptation is important

Sustainability as an objective is quite critical since India has a high degree of susceptibility to the climate.

The adoption of renewable energy is increasing, in particular, the transition to solar and wind energy.
The Government program ‘Mission LiFE’ is aimed at promoting responsible consumption and committing to reducing consumption.
India aspires to become Net-Zero in carbon emissions by 2070.

Social Sector: Expanding and Empowering

Investment by government on social welfare, education, and healthcare increased.
Rural healthcare and sanitation expansion – Ayushman Bharat and Swachh Bharat Mission – was targeted.
Education, digital, and youth employment skill development efforts changed.

Employment and Skill Development

Unemployment is still an issue, but job opportunities in digital and AI-powered industries are increasing.
More funding is necessary for vocational education.
Government programs are effective in the skilling challenge.

Increased employment for women is evident, but disparities in employment issues among gender still exists.

Impact of AI on labour , a victim or a beneficiary

For employment opportunities , there is a need for digital literacy
prevent job losses due to automation, reskilling and digital literacy
The application of AI can aid in enhancing effectiveness, productivity, and global competitiveness

The Economic Survey 2024-25 has a more positive take on India’s economy. Although, issues of investment, inflation and job creation are still there, the underlying strong economic fundamentals of the country combined with the reform policies gives hope for sustainable growth.

India is at a crossroad with respect to the direction of its economy. Effective economic policies and sharper reforms will lead the economy towards a favorable promised land!