Economic Survey 2024-25: India's GDP Likely To Grow At 6.3-6.8 Per Cent In FY26
The document said that elevated geopolitical and trade uncertainties will act as major challenges to growth, along with likely commodity price fluctuations.
The Economic Survey 2024-25 projected India's GDP to grow at the rate of 6.3 per cent to 6.8 per cent in the 2025-26 fiscal year (FY26). The survey was presented by Finance Minister Nirmala Sitharaman in the Parliament on January 31, a day ahead of the Union Budget presentation.
This marks the beginning of the Budget Session, which will last till April 4, 2025. Lok Sabha has been adjourned now till 11 AM February 1, 2025.
Indian Economy Outlook
Sharing the outlook for the economy ahead, the survey noted that economic prospects of India in FY26 are balanced. The document said that elevated geopolitical and trade uncertainties will act as major challenges to growth, along with likely commodity price fluctuations.
"Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation and a stable macro-economic environment provide an upside to near-term growth. Overall, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential," the document stated.
In terms of inflation, the survey expects food inflation to ease in the last quarter of the current fiscal year, backed by the seasonal softening of vegetable prices and Kharif harvest arrival. A robust Rabi production is expected to keep a tab on food prices in the first half of the incoming FY26.
The major risks to food inflation include adverse weather events and an increase in global agricultural commodity prices. Further, major global political and economic uncertainties pose a risk to the core inflation outlook, the survey stated.
"There are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides too. The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent," the survey noted.
India's GDP Likely At 6.4 Per Cent In FY25
The survey further stated that the domestic economy is estimated to grow at 6.4 per cent in the 2024-25 fiscal year (FY25), as per the first advance estimates of national accounts. The economic report card highlighted that growth in the first half of the current fiscal year was backed by agriculture and services, with improvement seen in rural demand due to record high Kharif production and favourable agricultural conditions.
"The manufacturing sector faced pressures due to weak global demand and domestic seasonal conditions. Private consumption remained stable, reflecting steady domestic demand. Fiscal discipline and strong external balance supported by a services trade surplus and healthy remittance growth contributed to macroeconomic stability. Together, these factors provided a solid foundation for sustained growth amid external uncertainties," the survey observed.
Retail headline inflation eased from 5.4 per cent in FY24 to 4.9 per cent in the April-December period in 2024. This decline was attributed to a 0.9 percentage drop in core (non-food, nonfuel) inflations seen between the 2023-24 fiscal year and April-December 2024 period. Food inflation, measured by the Consumer Food Price Index (CFPI), rose from 7.5 per cent in FY24 to 8.4 per cent in the current fiscal year so far, the survey pointed out. This surge was driven by some food items such as vegetables and pulses.
The survey observed, "While the average inflation in FY25 has trended downward, monthly volatility in food prices and a select few
commodities have been responsible for CPI inflation printing towards the upper side of the tolerance band of 4 (+/-) 2 per cent."
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