The Economic Survey 2024–25 was presented in Parliament by Union Finance Minister Nirmala Sitharaman on January 31, 2025. The Economic Survey offers a comprehensive assessment of India’s economic performance over the past financial year and presents policy recommendations for the upcoming fiscal year. Prepared by the Department of Economic Affairs under the Ministry of Finance, it serves as a resource of valuable insights for policy makers, economists, and researchers into key sectors like agriculture, industry, and services. Moreover, it outlines policy recommendations to address economic challenges and to accelerate growth.
State of the Economy: Accelerating towards Growth
In 2024, the global economic growth was uneven. Weak demand slowed manufacturing in Europe and Asia, while the services sector remained strong. Inflation declined overall but stayed high in services. Meanwhile, geopolitical risks and trade disruptions continue to create uncertainty in monetary policies.
Gross Domestic Product The Economic Survey projected India’s real gross domestic product (GDP) growth to range between 6.3 per cent to 6.8 per cent for 2025–26, with an estimated growth of 6.4 per cent in 2024–25. To achieve developed nation status by 2047, India would require consistent economic growth of around 8 per cent annually for at least a decade. Key drivers for this growth would include sustained investments, stronger consumer confidence, and rising corporate wages. Rural demand and a potential decrease in food inflation are expected to support short-term growth. However, risks such as commodity price shocks, ongoing trade and geopolitical uncertainties could pose challenges. To strengthen its medium-term growth potential, India must enhance its global competitiveness through structural reforms and deregulation under the Ease of Doing Business 2.0 (EoDB 2.0) and the development of a strong Small and Medium Enterprises sector (Mittelstand).
Inflation Global inflation has shown a downward trend, moderating from 8.7 per cent in 2022 to 5.7 per cent in 2024, as per the International Monetary Fund (IMF). In India, retail headline inflation fell from 5.4 per cent in 2023–24 to 4.9 per cent in 2024–25 (April to December), primarily due to lower input prices. Both the Reserve Bank of India and IMF projected that India’s consumer price inflation will gradually align with the 4 per cent target by 2025–26. However, food inflation has remained high, diverging from the global trend of stable or decreasing food inflation. Food inflation rose from 7.5 per cent in 2023–24 to 8.4 per cent in 2024–25 (April to December), driven mainly by higher prices for vegetables and pulses, contributing 32.3 per cent to overall inflation despite having 8.42 per cent weight in the consumer price index basket. This increase is attributed to supply chain disruptions and reduced harvests of certain food items, with vegetables being more vulnerable to irregular weather compared to food grains. To ensure long-term price stability, the survey suggests measures including (i) developing climate-resilient crop varieties; (ii) training farmers on best practices and using high-yield, disease-resistant seeds; and (iii) implementing robust data collection and analysis to track prices and stocks. The survey also highlighted that falling prices of imported commodities benefit India’s domestic inflation.
Current Account Balance India’s current account deficit (CAD) in the second quarter of 2024–25 reduced to 1.2 per cent of the GDP, slightly lower than the 1.3 per cent of the GDP recorded in the same quarter of 2023–24. The recent rise in the CAD is primarily due to higher net services receipts and remittances that helped offset the widening merchandise trade deficit, which grew to US$ 75.3 billion in the second quarter of 2024–25, up from US$ 64.5 billion in the same quarter of 2023–24. However, this was partly offset by higher net services receipts and private transfers. The survey highlighted that India’s CAD remains relatively manageable compared to other G20 countries like Brazil and Australia. To stay competitive and enhance its role in global supply chains, India must continue to reduce trade costs and improve export competitiveness.
Public Finance The central government has improved its fiscal position with capital expenditure increasing as a share of total spending since 2020–21. Despite gross tax revenue rising by 10.7% in 2024 (April–November) compared to 2023, higher tax devolution to states limited the Centre’s net tax revenue growth, strengthening state finances.
Good and services tax remains the primary revenue source for 23 states, with Manipur and Nagaland relying on it for over 70 per cent of their tax collections. The survey noted that fiscal management over the past four years has effectively prevented the widening of the overall savings-investment gap, ensuring adequate financing for the CAD despite a decline in household savings.
Agriculture and Allied Activities
The agriculture sector contributes 16 per cent to the GDP and employs 46.1 per cent of the country’s population. It has achieved an annual growth rate of five per cent from 2016–17 to 2022–23 that grew by 3.5 per cent in the second quarter 2024–25. This sustained growth has been driven by factors, such as favourable prices, better access to institutional credit, increased productivity, and crop diversification. Over the past decade, agricultural income has risen by 5.23 per cent annually, compared to 6.24 per cent growth in non-agricultural income and 5.80 per cent for the overall economy supported by initiatives aligned with the Doubling Farmers’ Income Report, 2016 including Per Drop More Crop, Digital Agriculture Mission, and e-National Agriculture Market.
Crop yields in India are significantly lower than those in other countries, emphasising the need for productivity improvements. The crop sector recorded a modest compound annual growth rate (CAGR) of 2.1 per cent from 2012–13 to 2021–22, primarily driven by higher production of fruits, vegetables, and pulses.
The growing importance of allied sectors like animal husbandry, dairying, agro- forestry and fisheries highlights the need for diversification in agriculture. By exploring these sectors, farmers could generate additional revenue streams that serve as buffers against the volatility of traditional crop production. However, the sector faces challenges such as climate change and water scarcity.
Industry
The industrial sector grew by 6.2 per cent in 2024–25, fuelled by strong performance in the electricity and construction sectors. However, industrial growth slowed to 3.6 per cent in the second quarter of 2024–25 due to factors including (i) a slowdown in manufacturing exports caused by increased trade competition and industrial policies of key trading nations; (ii) record monsoon levels that disrupted activities like mining and construction; and (iii) shift in festival seasons affecting consumer spending.
The government has been promoting the Smart Manufacturing and Industry 4.0 through the establishment of the Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) udhyog centres. Despite challenges, India has increased its share in global manufacturing, currently at 2.8 per cent, compared to China’s 28.8 per cent. With 639 million tonnes per annum capacity, India ranks second in the global cement production concentrated in 13 states (87 per cent), while low per capita consumption (290 kg) below the global average (540 kg) highlights growth potential. In 2023–24, India’s automobile sales grew by 12.5 per cent and domestic electronic goods production saw a CAGR of 17.5 per cent from 2014–15 to 2023–24. With 99 per cent of smartphones now produced domestically, India has reduced its import dependency. The pharmaceuticals sector reached a turnover of Rs 4.17 lakh crore in 2023–24, growing at 10.1 per cent CAGR over the past five years. India ranks sixth in global patent filings (WIPO Report 2022). The Micro, Small and Medium Enterprises (MSME) sector employs 23.24 crore individuals (second largest after agriculture). It has flourished, with the government launching the Rs 50,000 crore Self-Reliant India Fund and implementing policies, such as credit guarantee schemes, the Trade Receivables Discounting System, and the Micro and Small Enterprises-Cluster Development Programme.
Gujarat, Maharashtra, Karnataka, and Tamil Nadu contribute for about 43 per cent of the total industrial gross state value added, while the six northeastern states (excluding Sikkim and Assam) account for just 0.7 per cent. The survey highlighted the need for tailored industrial strategies for regions like the northeast.
India lags behind in research and development (R&D) with a substantial gap across key sectors. The current R&D expenditure stands at just 0.64 per cent of the GDP, which is insufficient and lower than many other countries. The survey recommended promoting collaboration between industry and academia, increasing private sector involvement and focusing on applied research to bridge this gap.
Services Sector
The services sector has grown at an average rate of 8.3 per cent between 2022–23 and 2024–25. Its contribution to the total gross value added has increased from 50.6 per cent in 2013–14 to around 55.3 per cent in 2024–25. In 2024–25, the services sector has played a key role in supporting GDP growth, especially as manufacturing has been impacted by the slowdown in global merchandise trade.
In 2023, India accounted for 4.3 per cent of global services exports, ranking seventh globally. Services export growth surged to 12.8 per cent during April–November between 2024–25, up from 5.7 per cent in 2023–24. Information and computer-related services grew at a steady rate of 12.8 per cent over the past decade, increasing their share of overall gross value added from 6.3 per cent (2012–13) to 10.9 per cent (2022–23). India’s telecom sector, with 1.18 billion subscribers and 941 million broadband users, leads in affordable data rates and 5G rollout making it world’s second-largest telecommunications market. Indian Railways saw an 8 per cent increase in passenger traffic and a 5.2 per cent rise in revenue-earning freight in 2023–24. Additionally, the tourism sector’s contribution to GDP rebounded to 5 per cent in 2022–23, returning to pre-pandemic levels.
The Survey highlighted the necessity of adequately skilling the labour force to support sectoral growth. To sustain the momentum, AI-driven skilling initiatives and regulatory reforms are essential for overcoming global risks and boosting domestic integration.
Investment and Infrastructure
Over the past five years, the Government has focused on increasing public spending on infrastructure and expediting approvals and resource mobilisation. Capital expenditure on infrastructure grew by 38.8 per cent from 2019–20 to 2023–24. Key achievements include commissioning 2031 kilometres of railway network, constructing 5853 kilometres of National Highways in 2024–25 and allotting 383 industrial plots under the National Industrial Corridor Development Programme. Operational efficiency of major ports was improved, with average container turn- around time from 48.1 hours to 30.4 hours during 2024–25 in major ports. Renewable energy capacity has grown by 15.8 per cent with 47 per cent share of India’s total installed capacity. Initiatives like Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme, and Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) enhanced rural electricity access, while 5G and 4G services expanded digital connectivity. The Jal Jeevan Mission provided piped water to over 12 crore families, and Swachh Bharat Mission-Grameen added 1.92 lakh Open Defecation Free (ODF) Plus villages.
The government’s Space Vision 2047 includes ambitious projects like Gaganyaan and Chandrayaan-4 Lunar Sample-Return Mission. Despite efforts by the central government, states, and public sector undertakings, there remains a substantial unmet demand for infrastructure development. To address this gap, innovative financing methods and increased private sector participation are essential. The government has established initiatives like the National Infrastructure Pipeline and National Monetisation Pipeline to encourage private sector participation in infrastructure development as there is a need to accelerate infrastructure investment over the next two decades to sustain a high growth rate.
Employment and Skill Development
India’s labour market has improved, with the unemployment rate declining from 6 per cent in 2017–18 to 3.2 per cent in 2023–24 (July–June). The proportion of self-employed workers increased from 52 per cent in 2017–18 to 58 per cent in 2023–24, reflecting a rise in entrepreneurial activity and a preference for flexible work arrangements. However, the share of workers in regular or salaried jobs slightly decreased from 23 per cent to 22 per cent.
With 26 per cent of the population aged between 10 and 24 years, India is poised to capitalise on its demographic advantage as one of the youngest nations. The government has launched initiatives to support women’s entrepreneurship, including easier access to credit, marketing, and skill development. The growing digital economy and renewable energy sectors are creating more job opportunities. To keep pace with global trends like automation and AI, the government is building a skilled workforce. Measures to boost employment and welfare, along with the PM-Internship Scheme, are helping generate jobs, while Employees Provident Fund Organisation payroll additions signal growth in formal employment.
Labour in the AI Era
AI is set to transform industries, but challenges like reliability and infrastructure gaps remain. India has a window to build policies, upskill its workforce, and embrace ‘Augmented Intelligence’, ensuring human-AI collaboration. A joint effort from the government, private sector, and academia is crucial for a balanced AI-driven future.
Climate and Environment
India’s goal of becoming a developed nation by 2047 is centred on an inclusive and sustainable development. As of November 30, 2024, India has installed 2,13,701 megawatts of electricity capacity from non-fossil fuel sources, making up 46.8 per cent of the total capacity. According to the Forest Survey of India 2024, an additional 2.29 billion tonnes of CO2 equivalent carbon sink has been created between 2005 and 2023. The India-led global initiative, Lifestyle for Environment, aims to boost sustainability efforts, with estimates suggesting it could save consumers’ US$ 440 billion globally by 2030 through reduced consumption and lower prices.
Conclusion
Finally, the survey emphasises that reducing excessive regulatory burdens could help businesses improve efficiency, cut costs, and unlock growth opportunities. Regulations often increase operational costs for firms. The survey outlines a three-step process for states to review regulations for cost-effectiveness: identifying areas of deregulation, comparing regulations with those in other states and countries and estimating their cost on enterprises. It advocates for EoDB 2.0, a state-led initiative aimed at addressing the root causes of business challenges. The next phase of EoDB should focus on liberalising standards, improving enforcement, reducing fees, and applying risk-based regulation.
The survey highlights that India’s economic outlook for 2025–26 is balanced, with growth risks from geopolitical and trade uncertainties and potential commodity price shocks. Domestically, key factors for growth include translating private capital goods sector orders into sustained investments, boosting consumer confidence, and increasing corporate wages. Rural demand, supported by agricultural recovery, easing food inflation, and a stable macroeconomic environment offers positive prospects for near-term growth.
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