Nirmala Sitharaman Presents the 2024-25 Economic Survey – An In-Depth Analysis

The Economic Survey 2024-25, developed by India's Ministry of Finance, provides an in-depth analysis of the country's economic performance, sectoral developments, and policy recommendations. Below is a chapter-wise breakdown of the survey:

Chapter 1: State of the Economy

The global economy in 2024 showed uneven growth, with Europe and Asia facing slowdowns in manufacturing due to supply chain issues, while the services sector helped sustain growth in many regions. Inflationary pressures eased globally, but risks such as geopolitical tensions remained. India’s economy is on track with a projected 6.4% GDP growth in FY25, supported by strong performance in agriculture and services, although manufacturing faced challenges. India’s fiscal discipline, service sector trade surplus, and robust external balance contribute to overall economic stability. Food inflation is expected to ease due to a strong Kharif harvest and improving agricultural conditions.

Chapter 2: Monetary and Financial Sector Developments

India’s monetary policy remained stable, with the RBI maintaining the policy repo rate at 6.5% for most of FY25. It also adopted a neutral stance and reduced the CRR to 4%, injecting ₹1.16 lakh crore into the banking system. Bank credit grew steadily, NPAs decreased, and profitability improved. The capital market also saw growth, with more IPOs and increased investor participation, contributing to greater financial inclusion.

Chapter 3: External Sector: Attracting FDI

India's trade performance remained strong despite global uncertainties. Efforts like export promotion schemes and enhanced ease of doing business supported trade growth. India continues to focus on attracting Foreign Direct Investment (FDI) to boost manufacturing and technology sectors. The services sector surplus continues to offset challenges in goods trade, ensuring a resilient balance of payments.

Chapter 4: Prices and Inflation

Global inflation peaked at 8.7% in 2022 but declined to 5.7% in 2024. In India, retail inflation moderated to 4.9% in FY25 due to government actions and supply chain stabilization. Food inflation, particularly driven by onion and tomato prices, was mitigated by timely government interventions. India’s inflation outlook remains positive, supported by stable core inflation and easing global commodity prices.

Chapter 5: Medium-Term Outlook: Deregulation for Growth

India’s long-term growth prospects rely on regulatory reforms and deregulation, which will enhance economic freedom and ease of doing business. To achieve the goal of becoming a developed nation by 2047, India needs to grow at 8% annually over the next two decades. The IMF projects India to become a $5 trillion economy by FY28 and reach $6.3 trillion by FY30. Removing regulatory barriers will be key to sustained medium-term growth.

Chapter 6: Investment and Infrastructure

Infrastructure investment has seen significant improvements, driven by public capital expenditure (capex) aimed at enhancing connectivity across sectors. Key areas include power, digital, urban, and rural infrastructure, as well as advancements in tourism and space sectors. Continued investment, both public and private, is essential to sustain infrastructure growth.

Chapter 7: Industry: Business Reforms and Growth

India’s industrial sector has performed well, particularly in core industries like steel, cement, and chemicals. The chapter stresses the importance of deregulation and business reforms for growth, with innovations in capital goods, consumer goods, and R&D gaining momentum. The MSME sector has also benefitted from policy interventions, with successful production-linked incentive (PLI) schemes, especially in air conditioners.

Chapter 8: Services Sector: New Challenges

India’s services sector continued to perform strongly, particularly in IT, business services, and logistics. FDI inflows into services have remained stable. The chapter also highlights the growth in physical connectivity services, like railways and airways, boosting domestic tourism. It focuses on state-wise disparities in service sector performance and its contribution to the overall economy.

Chapter 9: Agriculture and Food Management

Agriculture has grown steadily, supported by initiatives like PM-KISAN and Pradhan Mantri Kisan Maandhan Yojna. Challenges remain in productivity, especially in pulses and oilseeds, but the sector is crucial for food security. The chapter advocates for sustainable farming practices and policy shifts to encourage higher productivity and diversification from overproduced crops.

Chapter 10: Climate and Environment: Adaptation Focus

India’s approach to climate change focuses on adaptation, with lessons drawn from global energy transitions in Europe and China. The government is working on an energy transition strategy that prioritizes energy security. The chapter concludes with a look at the Lifestyle for Environment (LiFE) initiative, which promotes sustainable practices.

Chapter 11: Social Infrastructure, Employment, and Human Development

Investment in social infrastructure has increased, focusing on health, education, housing, and sanitation. Rural connectivity and microfinance initiatives have improved living standards in rural areas. The chapter emphasizes gender equality and sustainable job creation, recommending regulatory reforms in health and education to focus on outcomes rather than rigid compliance.

Chapter 12: Employment and Skill Development

India’s labor market has recovered post-pandemic, with unemployment dropping from 6% in 2017-18 to 3.2% in 2023-24. There have been improvements in labor force participation and worker-to-population ratios. The government is focused on reskilling, upskilling, and new-skilling the workforce to align with global demands, aiming to achieve the vision of Viksit Bharat by 2047.

Chapter 13: Labour in the AI Era: Crisis or Catalyst?

This chapter explores AI's impact on labor markets, emphasizing the need for inclusive policies to manage potential disruptions. While AI presents opportunities, challenges like inefficiencies and infrastructure gaps remain. India is poised to benefit from AI with strategic investments in education and workforce skills, ensuring AI drives equitable economic growth.

Economic Survey 2024-25: Key Takeaways

1. India’s economy remains strong, with a 6.5% growth expected in FY25.
2. Inflation is under control, but food prices should be monitored.
3. FDI reforms and trade expansion are boosting the external sector.
4. Deregulation and business-friendly policies are driving industrial and services growth.
5. Infrastructure, agriculture, and digital transformation are crucial for medium-term growth.
6. AI, automation, and climate policies will shape India’s future workforce and economy.