The Economic Survey presented on January 31st predicts India's GDP growth to be between 6.3-6.8% for FY 2026. For FY 2025, real GDP is expected to grow by 6.4%, in line with the decade's average. The survey also expects a boost in exports, an increase in FDI by 17.9%, and improvement in foreign exchange reserves. The government is focusing on infrastructure investments and sustainable development regulations.
Key Performing Sectors
The survey highlighted that the global economy would grow by 3.3% in 2023 and demonstrate stable but uneven growth in 2024. The slowdown in global manufacturing was mainly due to supply chain disruptions and weak external demand. However, the service sector performed well, supporting growth in several economies. Inflationary pressures have eased, although service inflation remains persistent.
Private consumption expenditure is expected to increase by 7.3% in FY 2025, driven by rural demand. The industrial sector is projected to grow by 6.2%, supported by strong growth in construction activities and utilities. The services sector is expected to grow by 7.2%, driven by financial, real estate, and other professional services.
India's Vision for 2047
The survey discusses the importance of evaluating India's medium-term development goals in the context of global economic fragmentation, energy transitions, and China’s manufacturing capacity. The focus should be on strengthening internal engines and improving the country’s competitiveness through systemic regulation and structural reforms. The survey emphasizes economic freedom and creating an enabling environment for SMEs.
Non-Performing Assets (NPAs) and Banking Sector
The banking sector shows stability with a significant reduction in gross non-performing assets (NPAs), which have dropped to 2.6% of gross loans, the lowest in 12 years. India's foreign exchange reserves have increased from $616.7 billion in January 2024 to $704.9 billion by September 2024, offering sufficient protection against external vulnerabilities.
Infrastructure Developments
The survey underscores the need for continuous infrastructure investment over the next two decades to maintain high growth. Significant improvements have been made in railway connectivity and port capacities, enhancing operational efficiency and reducing turnaround time at major ports.
Challenges Ahead
Despite the optimistic growth forecast, challenges such as geopolitical uncertainties, commodity price shocks, and the need for sustained domestic investment remain. India needs structural reforms at the ground level to strengthen its global competitiveness.
Expert Opinions on the Economic Survey
Industry leaders and experts have praised the survey for its progressive and developmental outlook. They highlighted the need for consistent policy reforms and emphasized that reducing regulatory burdens and encouraging private sector involvement are critical for fostering growth and job creation. AI’s potential was also discussed as both an opportunity and a challenge, requiring policy adjustments to harness its full power.