India embarks on an ambitious path to transform its economy with significant strategies set forth by the Economic Survey 2024-25, underscoring the necessity for sustained growth rates around 8% over the next two decades to fulfill its aspirations for becoming Viksit Bharat by 2047. The Ministry of Finance, led by Union Finance Minister Nirmala Sitharaman, laid out these core objectives, emphasizing the government's commitment to achieving economic resilience.
According to the Economic Survey, the investment rate must increase from 31% to approximately 35% of the gross domestic product (GDP) to reach these targets. Alongside this, the manufacturing sector will play a pivotal role as India aims to innovate and embrace technologies like artificial intelligence (AI), robotics, and biotechnology, stated the report. To sustain momentum, the country must also create 7.85 million new non-farm jobs annually until 2030.
Reflecting on the future outlook, the Economic Survey simultaneously forecasts the GDP growth rate for fiscal year 2025 (FY25) at 6.4%. This projection aligns with the International Monetary Fund's (IMF) expectations, which estimate India's GDP growth to hover around 6.5% between FY26 and FY30. The report’s optimistic note points to rebounding rural demand as being favorable for consumption, alongside anticipated growth due to increased public capital expenditure.
The emphasis on deregulation and enhancing the economic freedom of individuals and organizations is another decisive factor highlighted by the Economic Survey. "The best way to succeed is to start relying on the internal engines and domestic levers of growth," it mentions, underpinning the need for structural reforms to improve global competitiveness. The continued rationalization of regulations and facilitation of small and medium enterprises (SMEs) is key to achieving these objectives.
"Accelerated deregulation is the need of the hour," said Atul Pandey, partner at Khaitan & Co. He noted the struggle many companies endure with the compliance requirements, adding, "This, in turn, escalates compliance costs, particularly for micro, small, and medium enterprises (MSMEs)." The survey critiques existing compliance structures, asserting the necessity for those regulations to balance efficacy and minimalism to spur economic potential.
To support its growth strategy, India will develop quality infrastructure at speed. The National Infrastructure Pipeline (NIP) aims for significant capital investment from FY20 to FY25, highlighting projects like the Mumbai-Ahmedabad High-Speed Rail, which presently sits at 47.17% completion.
Another aspect of infrastructure development is the increase of railway and roadways capacity, promoting efficient transport solutions for economic mobilization. For example, Dedicated Freight Corridors have reported nearing completion, enhancing logistics efficiencies.
Investment dynamics are substantial; gross fixed capital formation has seen consistent growth, which, coupled with private investment expectations, sets the stage for stable economic expansion. India is expected to experience growth rates reflecting its promise of 6.4% this fiscal year, according to the official estimates.
Domestic challenges persist, particularly with job creation. Without integrating larger portions of the population, especially its youth, the risk remains of being trapped within the middle-income classification, as warned by the NITI Aayog. This, thereby, sets the demand for substantial job creation against the backdrop of economic aspirations.
Meanwhile, the global economy's performance is largely tied to India's success. Global economic growth did witness some stabilization post-pandemic, yet uneven trends persisted, particularly across advanced economies versus developing markets. India's resilience is reflected by its overall industrial sector bouncing back strongly, exhibiting 6.2% growth reported for FY25.
Inflation rates have seen corrections as well, mainly due to central policy measures, pushing retail inflation down to 4.9% by December 2024 — something deemed necessary as Indian households grapple with the cost of living. Agriculture sector recovery also plays its part; significant production boosts due to favorable weather conditions have enhanced rural demand, complementing overall economic activity.
Nonetheless, the nation’s manufacturing sector still needs expansion to lessen reliance on imports — particularly from economies like China, underscoring the importance of self-sufficiency. India’s strategies will significantly rely on domestic capabilities, prompting initiatives to uplift local manufacturing prowess, particularly under the Production-Linked Incentive (PLI) scheme aimed at enhancing sectors like electronics and pharmaceuticals.
To conclude, India's roadmap for economic expansion is multifaceted, prioritizing substantial investment, deregulation, infrastructure development, technology adoption, and job creation as core pillars. Reaching sustainable economic growth compounded by structural reform, India aims for equitable and inclusive development as it strides toward its long-term aspirations.