What is Economic Survey?
The Economic Survey is an annual report. The Department of Economic Affairs prepares it under the guidance of the Chief Economic Adviser. It provides a comprehensive overview of the country’s economic performance over the past year. The report analyzes key metrics such as GDP growth, inflation, employment, and trade balances. The survey is traditionally presented a day before the Union Budget. It offers insights into the current economic landscape. It also sets the stage for policy discussions and budgetary allocations. Finance Minister Nirmala Sitharaman presented the Economic Survey 2025 in Parliament on January 31.
10 key highlights of the Economic Survey 2025
1. India’s economy will remain stable
Despite global uncertainty, India’s real GDP growth of 6.4% in the financial year 2024-25 stays near the decadal average. This is stated in the first advance estimates of national income, according to the survey.
As a result, “from an aggregate supply perspective, real gross value added (GVA) is also estimated to grow by 6.4 per cent FY25,” the survey said.
2. All sectors will contribute to growth
All sectors are performing well, the Economic Survey document said. “The agriculture sector remains strong, consistently operating well above trend levels. The 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.”
3. Inflation is coming under control
Retail headline inflation softened from 5.4% in the financial year 2023-24 to 4.9% during the April-December period of 2024-25, according to the survey.
“Despite challenges, there are positive signs for inflation management in India. The Reserve Bank of India and the International Monetary Fund (IMF) project that India’s consumer price inflation will gradually align. It will reach the target of around 4 per cent in FY26,” the survey read.
4. FPI positive overall, FDI shows signs of revival
Foreign portfolio investments (FPIs) have shown a mixed trend in 2024-25 so far. Uncertainty in the global markets and profittaking by foreign portfolio investors led to capital outflows. However, strong macroeconomic fundamentals, a favourable business environment, and high economic growth have kept FPI flows positive overall.
Meanwhile, gross foreign direct investment (FDI) inflows have shown signs of revival in the first eight months of 2024-25. Net FDI inflows declined relative to April-November 2023 because of a rise in repatriation/disinvestment.
5. Forex reserves are strengthening
The economic survey showed India’s Forex reserves were at a high of $706 billion in September 2024. They stood at $640.3 billion by December 27, 2024, covering 89.9% of external debt.
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6. Banking and Insurance sector is stable
Commercial banks have reported a consistent decline in their gross non-performing assets (GNPA) ratio. It decreased from its peak in FY18 to a low of 2.6 per cent at the end of September 2024,” according to the survey.
Apart from this, the credit-GDP gap also narrowed to 0.3% in the first quarter of 2024-25 from -10.3% in the same quarter of the previous year, which indicates that the recent growth in bank credit is sustainable.
Moreover, insurance premiums grew 7.7% in 2023-24, reaching ₹11.2 lakh crore. The total number of pension subscribers grew by 16% year-on-year as of September 2024, according to the survey.
7. Exports are growing
In the first nine months of FY25, India’s total exports (merchandise and services) have grown steadily. They reached USD 602.6 billion (6 per cent). Growth in services and goods exports, excluding petroleum and gems and jewellery, was 10.4 per cent. Total imports during the same period reached USD 682.2 billion, registering a growth of 6.9 per cent on the back of steady domestic demand.
“The evolving global trade dynamics, marked by gradual shifts towards greater protectionism, require assessing the situation. We need to develop a forward-looking strategic trade roadmap. The survey emphasized the potential for India to accelerate its growth. It can do so by adapting to the trends and leveraging its strengths. This would also enhance its presence in global trade.”
8. MSME Credit growth remains strong, personal credit moderates
Sector-wise, the growth in agriculture credit as of 29 November 2024 in the current financial year was 5.1%. Meanwhile, the growth in industrial credit picked up and stood at 4.4% as of the end of November 2024, higher than 3.2% recorded a year ago.
Across industries, bank credit to micro, small, and medium enterprises (MSMEs) have been growing quickly. This growth surpasses the credit disbursal to large enterprises.
By the end of November 2024, credit to MSMEs grew by 13% compared to the previous year. In contrast, it stood at 6.1% for large enterprises.
However, credit growth to the services and personal loans segments moderated to 5.9% and 8.8% respectively, as of the end of November 2024 in the current financial year. Amongst the services sector, the moderation has been driven by a slowdown in credit disbursal to NBFCs.
Vehicle and housing loans drove the moderation in the personal loans segment. RBI increased risk weights to NBFCs and credit cards. These policy interventions contributed to moderating credit growth in those segments.
9. Deregulation needed for growth
The Economic Survey calls for deregulation to drive growth.
“A fundamental pre-requisite is to accelerate and amplify the deregulation agenda already underway in the last ten years. It aims to give people back their agency and enhance the economic freedoms of individuals and organisations,” the survey read.
This is to upgrade the capacity and know-how of component manufacturers. It aims to increase the availability of trained human resources. The plan addresses resource bottlenecks and regulatory impediments. These actions will accelerate India’s gross fixed capital formation.
10. Infrastructure sector a key focus, but private players must participate more
“Building infrastructure has been a central focus area for the Government in the last five years. This includes physical, digital, and social infrastructure. This has had various dimensions. There is an increase in public spending on infrastructure. The government has created institutions to de-bottleneck approvals and execution. Additionally, there are innovative modes of resource mobilisation. In FY25, capital expenditure has gathered momentum postelections,” the survey read.
“The government has recognised the importance of continuing the pace of infrastructure building. There is an increasing need to promote sustainable construction practices,” it added.
However, “It is also clear that public capital alone cannot meet the infrastructure upgrade demands. These demands must align with the requirements of Viksit Bharat@2047. We need to ensure increasing private participation in infrastructure. This can be done by improving their capacity to conceptualise projects. We must also enhance their confidence in risk and revenue-sharing mechanisms. Additionally, focus on contract management, conflict resolution and project closure is important. The efforts of the Union Government must be supported. This support requires wholehearted acceptance of public-private partnerships in infrastructure across the country.”
