The Economic Survey 2024-25, presented by Finance Minister Nirmala Sitharaman on January 31, 2025, offers a comprehensive analysis of India’s economic performance and outlines projections for the upcoming fiscal year.
Key Highlights:
- GDP Growth Projections: The Survey forecasts India’s economy to grow between 6.3% and 6.8% in the fiscal year 2025-26, following an estimated 6.4% growth in 2024-25. This projection is based on factors such as robust rural demand, a rebound in agricultural production, and stable macroeconomic conditions.
- Inflation Outlook: The Survey indicates that inflation risks appear limited for FY26. However, it cautions that geopolitical tensions could introduce vulnerabilities, potentially affecting commodity prices and supply chains.
- Impact of Artificial Intelligence (AI): A significant focus is placed on the potential effects of AI on India’s labor market. The Survey warns that while AI’s impact on labor will be globally felt, the challenge may be more pronounced for India due to its large workforce. It emphasizes the need for robust institutions to facilitate upskilling and reskilling initiatives to mitigate potential job displacement.
- Financial Market Observations: The Survey notes that a sharp correction in India’s equity markets could negatively impact retail investor sentiment and spending. With retail participation at record highs, especially post-COVID-19, many new investors have not experienced significant market corrections. The Survey highlights the increased correlation with U.S. markets as a potential risk, suggesting that a downturn in U.S. equities could have a cascading effect on India.
- Regulatory Recommendations: The Survey advocates for India’s financial regulators to implement formal impact assessment processes for their regulations. It suggests the creation of internal Regulatory Impact Assessment (RIA) agencies that report directly to a board comprising government officials and independent directors. This move aims to enhance transparency, objectivity, and responsiveness in the regulatory framework.
Conclusion:
The Economic Survey 2024-25 underscores India’s robust economic fundamentals while acknowledging potential challenges. It emphasizes the importance of proactive policy measures, especially in areas like labor upskilling in response to technological advancements and the need for formal regulatory impact assessments to ensure sustainable growth
