Economic Survey 2025: From GDP Growth To Inflation Numbers; Here Are The Major Highlights

Retail inflation in India has decreased from 5.4 per cent in FY24 to 4.9 per cent during FY25 (April-December), thanks to a combination of government initiatives and monetary policy measures

The agriculture and services sectors showed strong performance, while manufacturing struggled due to weaker global demand and ongoing supply chain disruptions

Source : AI

Union Finance Minister Nirmala Sitharaman presented the Economic Survey for the fiscal year 2024-25 on Friday ahead of the Budget presentation on Saturday. This key document provides an in-depth review of India’s economic performance and challenges. It was compiled by Chief Economic Adviser (CEA) V Anantha Nageswaran and his team.

The survey projects India’s economy will grow between 6.3 per cent and 6.8 per cent in FY26. Nageswaran noted that while India’s growth trajectory remains steady, globalisation is slowing, presenting both challenges and new opportunities. To sustain growth, India must focus on economic reforms and harness the potential of its young workforce.

Despite global economic uncertainties, India’s economy remains robust. The survey points to the solid health of India’s financial and corporate sectors, backed by strong government policies, consistent private spending, and fiscal discipline, which contribute to the economy’s resilience. However, the decline in globalisation could pose future risks.

Growth In First Half Of FY25

India’s economy grew by 6.2 per cent during the first half (H1) of FY25. Growth was 8.3 per cent in Q1 FY25 but slowed to 5.4 per cent in Q2, mainly due to challenges in the industrial sector.

The agriculture and services sectors showed strong performance, while manufacturing struggled due to weaker global demand and ongoing supply chain disruptions.

The slowdown in Q2 FY25 can be attributed to three key factors. First, lower exports, driven by reduced demand for Indian goods due to trade restrictions and a sluggish global market, played a significant role. Second, while the monsoon was favourable for agriculture, heavy rains disrupted sectors like mining, construction, and some manufacturing. Lastly, the timing of major festivals, which were celebrated later than usual, also contributed to reduced economic activity during the quarter.

India’s GDP Performance in FY25

India’s GDP grew by 6.7 per cent in Q1 FY25, but slowed to 5.4 per cent in Q2, resulting in an overall 6 per cent growth in the first half of FY25. Despite a strong start, the mixed performance indicates underlying challenges.

Inflation

Retail inflation in India has decreased from 5.4 per cent in FY24 to 4.9 per cent during FY25 (April-December), thanks to a combination of government initiatives and monetary policy measures. Food inflation is mainly influenced by a few items like vegetables and pulses. Extreme weather and uneven monsoons have disrupted vegetable production, leading to price pressures, particularly in tomatoes and onions. Lower onion production and seasonal fluctuations in tomato prices contribute to these pressures. Additionally, post-harvest losses, seasonality, and regional factors also play a role. Deficient tur dal production in recent years has further added to food inflation.

Global food inflation is easing due to better supply conditions, but countries like Brazil, India, and China are experiencing a different trend, with inflation remaining relatively higher compared to the global average.

Banking Sector Performance

The banking sector experienced improvements in asset quality, marked by a decline in Gross Non-Performing Assets (GNPAs) and a rise in the CRAR. By the end of September 2024, the GNPA ratio for Scheduled Commercial Banks (SCBs) had fallen to a 12-year low of 2.6 per cent. Bank credit growth began aligning more closely with deposit growth, although credit growth across various sectors showed signs of moderation. Meanwhile, the profitability of SCBs improved during the first half of FY25.

Cybersecurity 

The growing digitalisation of India’s financial sector has boosted efficiency but also heightened vulnerability to cyber threats. In response, India has bolstered its cybersecurity framework and now ranks highly in the Global Cybersecurity Index. Additionally, there have been notable trends and policy shifts in India’s monetary policy and financial intermediation ecosystem, reveals the report.

Surge In Global IPO Listings

The Economic Survey highlights that India’s share in global IPO listings surged to 30 per cent in 2024, up from 17 per cent in 2023. This growth reflects India’s rising prominence in international finance. 

Rural Demand Expected To Improve

The survey forecasts an increase in rural demand, supported by a recovery in agriculture, lower food prices, and a stable economy. However, global factors, such as trade tensions and rising commodity prices, could still have an impact.

Employment and Electricity Costs

The Chief Economic Adviser (CEA) stressed the importance of job creation for economic growth. He also pointed out that high electricity costs in India put businesses at a disadvantage compared to countries like Vietnam and Bangladesh, where industrial electricity rates are lower.

Infrastructure Development In FY25

Over the past decade, India has made significant progress in infrastructure, with key improvements including the introduction of new trains and airports, faster port operations (with turnaround times reduced from 48 hours to 30 hours), increased power capacity, lower data costs, and enhanced telecom networks. These advancements have bolstered India’s competitiveness in the global economy, positioning it for stronger growth, states the survey.