Winning Bizness Desk
Mumbai.Union Finance Minister Nirmala Sitharaman presented the Economic Survey in Parliament on January 31, 2025. According to the survey, India’s GDP growth is projected to be between 6.3% and 6.8% for the financial year 2025-26, covering the period from April 1, 2025, to March 31, 2026. Meanwhile, retail inflation stood at 4.9% from April to December 2024.
The Economic Survey is presented a day before the Union Budget and provides an overview of the country's economic condition, GDP estimates, and inflation trends. It is prepared by the Department of Economic Affairs.
Key Highlights of Economic Survey 2025:
Economic Growth: India's economy is expected to grow at a rate of 6.3% to 6.8% in 2025-26. The survey states that to achieve the goal of a developed India by 2047, the country needs to maintain an 8% growth rate for the next one to two decades.
Inflation: Retail inflation, which was 5.4% in 2023-24, fell to 4.9% between April and December 2024. Inflation is expected to decline further in the fourth quarter. However, food inflation increased due to supply chain disruptions caused by unfavorable weather and low agricultural yield.
Employment: The labor market has improved significantly in the past seven years. The unemployment rate dropped to 3.2% in FY24. Additionally, net payroll enrollment in the Employees' Provident Fund Organisation (EPFO) has doubled over the last six years, indicating growth in formal sector employment.
Artificial Intelligence (AI): The rapid development of AI is creating new opportunities in the global labor market while also posing significant challenges. The survey emphasizes the need to mitigate the negative effects of AI-driven changes.
Infrastructure Investment: To sustain high growth over the next two decades, India needs significant investment in infrastructure. Over the past five years, the government has focused on physical, digital, and social infrastructure. However, public funding alone will not suffice, necessitating increased private sector participation.
Risk from U.S. Markets: The biggest risk to Indian markets comes from the United States. The survey warns of a high possibility of corrections in the U.S. markets, which could impact Indian stock markets, particularly retail investors.
Inflation at Four-Month Low in December 2024
Due to lower food prices, retail inflation in December 2024 fell to a four-month low, reaching 5.22%. In November, inflation stood at 5.48%, while in August, it was recorded at 3.65%.
Food items account for nearly 50% of the inflation basket. Food inflation dropped from 9.04% to 8.39% on a month-on-month basis. Additionally, rural inflation fell from 5.95% to 5.76%, while urban inflation declined from 4.89% to 4.58%.
What is the Economic Survey?
Much like a household maintains a financial record at the end of the year to assess income, expenses, and savings, the Economic Survey serves as India's financial report card. It provides an overview of the economy's performance over the past year, along with projections, challenges, and recommendations for the future.
Who Prepares the Economic Survey?
The Economic Survey is prepared under the supervision of the Chief Economic Advisor (CEA) within the Economic Division of the Department of Economic Affairs, Ministry of Finance. Currently, Dr. V. Anantha Nageswaran serves as the CEA.
Why is the Economic Survey Important?
The Economic Survey plays a crucial role in shaping economic policies by providing a comprehensive analysis of the country’s financial health. It serves as a roadmap for necessary reforms and policy decisions to improve economic performance.
Is the Government Obligated to Follow the Survey’s Recommendations?
The government is not bound to implement the recommendations or suggestions mentioned in the Economic Survey. However, it remains an essential document as it provides valuable insights into the country's economic trends and challenges.
History of the Economic Survey
India’s first Economic Survey was presented in 1950-51 as part of the Union Budget. However, since 1964, it has been presented separately, a day before the Budget announcement.
