New Delhi : The Economic Survey 2024-25, tabled today by Finance Minister Nirmala Sitharaman, presented a detailed analysis of India’s economic performance over the past year and projections for the upcoming fiscal period. Despite global uncertainties, the survey estimates India’s real GDP growth at 6.4% for 2024-25, aligning closely with the nation's decadal average.

For FY26, the survey projects GDP growth to range between 6.3% and 6.8%. Former Reserve Bank of India governor Dr C Rangarajan noted that the potential rate of growth appears to be 6.5%, given the existing global uncertainties. He suggested that with additional efforts, India could aim for a 7% growth rate, though this may be challenging in the coming year. With an inflation rate expected to be between 4% and 5%, the nominal growth rate is anticipated to reach 11.5%. At this pace, the target of becoming a developed country could be realized slightly later than 2047.

Highlighting the importance of sustained economic growth, the survey underscores that achieving Viksit Bharat by 2047 would require an average annual growth rate of approximately 8% at constant prices for the next two decades. To reach this target, the investment rate must rise to around 35% of GDP from the current 31%. Further expansion of the manufacturing sector and investments in emerging technologies like AI, robotics, and biotechnology are also emphasized.

Additionally, India needs to generate 78.5 lakh new non-farm jobs annually until 2030, attain 100% literacy, enhance the quality of educational institutions, and develop high-quality, future-ready infrastructure at scale and speed. The survey also stresses the necessity of “deregulation and reforms at the grassroots level” and granting “economic freedom to individuals and organizations” to boost competitiveness and lift trend growth rates.

Chief Economic Advisor V Anantha Nageswaran, in the survey’s foreword, cautioned that the era of rapid global trade growth is fading, which could impact India’s export expansion. He noted that domestic growth levers will be more critical than external factors in the coming years. Nageswaran also highlights global risks, including the strengthening of the US dollar, changing Federal Reserve policies, and rising borrowing costs for sovereigns, all of which could impact India’s economic trajectory.

The survey also identifies India’s limited production capacity in key solar energy components such as polysilicon, ingots, and wafers as a constraint. Addressing this challenge requires aggressive efforts to attract and facilitate domestic and foreign investments. India faces competition not only from other emerging economies but also from advanced nations striving to retain businesses. Strengthening domestic supply chains and enhancing resilience will be crucial for long-term economic growth.

Regarding inflation, the survey anticipates food inflation to ease in Q4 FY25 due to the seasonal decline in vegetable prices and Kharif harvest arrivals. Strong Rabi production is expected to stabilize food prices in early FY26. However, adverse weather events and rising international agricultural commodity prices pose potential risks. While recent global energy and commodity price declines have kept core inflation in check, uncertainties in global political and economic conditions remain a concern.

On the overall economic outlook for FY26, the survey notes a balanced scenario. Potential growth challenges include geopolitical and trade uncertainties and possible commodity price shocks. Domestically, factors such as the conversion of private capital goods order books into sustained investment, improvements in consumer confidence, and corporate wage growth will be critical for driving economic expansion. A rebound in agricultural production, easing food inflation, and a stable macroeconomic environment are expected to support near-term growth.

BI Bureau