The Economic Survey 2024-25, presented by Union Finance Minister Nirmala Sitharaman on January 31, 2025, sets the tone for India’s economic outlook, projecting GDP growth rates between 6.3% and 6.8% for FY26, which is slightly below the anticipated 6.4% for FY25. The survey highlights significant reforms aimed at deregulation and modernization of business processes, asserting their pivotal role in fostering economic expansion amid global uncertainties.
Central to the report is the focus on India’s local growth drivers, especially as the country faces challenges from global economic dynamics. Notably, the survey acknowledges slower export growth as potential threats loom large from economic fluctuations, particularly within Europe and China. For example, with Germany experiencing two consecutive years of economic downturn, and France grappling with political instability, the ripple effects can severely impact international trade.
To combat these challenges, the Economic Survey emphasizes local factors as increasingly important to India’s economic future. It states, “Domestic growth levers will be relatively more important than external ones moving forward,” underscoring the need for strategic focus on domestic markets and investment.
Addressing structural inefficiencies, the report notes key regulatory reforms such as the Jan Vishwas Act and PAN 2.0, which aim to simplify compliance and make business operations more efficient. These changes come against the backdrop of India’s ambition to maintain high GDP growth and improve investment efficiency, reflecting the government’s broader agenda of liberalizing the economy.
Details on deregulation are highlighted throughout the document, promoting the idea of reducing compliance burdens for micro, small, and medium enterprises (MSMEs). The survey notes, “MSMEs bear disproportionately high compliance costs,” which can inhibit their growth. To remedy this, the government has initiated reforms over the past decade, ensuring tax laws and labour regulations enable rather than hinder business operations.
Among the major highlights, the agriculture sector continues to reveal strong performance with projected growth rates of 3.5% for FY25. This growth is attributed to significant government investments, including the allocation of INR 1.52 trillion to the agricultural sector, up from INR 1.22 trillion the previous year. The survey points out high-value segments like horticulture and livestock as key growth drivers.
Some state-level initiatives, such as the recent reforms to land use and easements, have shown promise. The Economic Survey recognizes factors such as land classification and excessive state-level regulations as barriers to investment, both of which stifle productivity and job creation. Every state is encouraged to adopt best practices and learn from successful models to boost local economies.
The report also calls for improvements to India's regulatory framework and enforcement actions. Notably, it mentions the existing insufficiency of inspectors, with only 644 inspectors managing over 320,000 factories, highlighting the burden this places on compliance and regulatory oversight. “Unrealistic regulatory standards adopted from high-capacity nations can worsen the enforcement gap,” the report adumbrates.
Global insights reflect on India’s commitment to evolve its economic practices by adopting best practices from countries like the UK and the US. The “one-in, two-out” policy suggests removing two existing regulations for every new one, thereby streamlining compliance and enhancing industrial growth.
Despite international challenges, India remains optimistic, especially as it continues to project favorable outcomes for its domestic economy. The report anticipates India’s services sector will also see increased contributions to GDP with notable surges, especially as technology and digital economy sectors expand.
Particularly, the survey celebrates the progress of the domestic production of electronic goods boasting a compound annual growth rate (CAGR) of 17.5% between FY15 and FY24, illustrating India’s growing capabilities to bolster its manufacturing sector.
India’s ambitious goal to fortify its green energy infrastructure has also gained momentum, with 47% of its total installed capacity now derived from renewable sources. This transition reflects the government’s intent to address climate change proactively, particularly through their National Adaptation Plan (NAP), underscoring resilient agricultural practices and climate-smart initiatives.
The government’s focus on digital advancements, including the rollout of 5G services across all states, signifies its dedication to improving infrastructural development and connectivity, which are fundamental to sustain economic momentum.
The previous year examined aspects such as credit access improvement, with Kisan Credit Cards now covering 77.5 million farmers, enhancing their financial stability and loan disbursement efficiency. The survey highlights efforts made to provide subsidies and streamlined credit flow which have contributed to the rural agricultural economy.
The survey rounds out with insights on the importance of innovation and private sector investment as drivers for sustained growth. Government efforts aim to align with the need for flexibility within labor markets, particularly as more businesses adopt technology-driven models. The initiatives to establish technology transfer partnerships signal India's recognition of the need for collaboration on the international stage.
Through these initiatives and analyses, the Economic Survey 2024-25 propounds the importance of local growth dynamics, adaptive regulatory frameworks, and resilient agriculture as cornerstones for India’s economic future. The government appears poised not only to navigate immediate global uncertainties but to leverage domestic strengths effectively for sustainable advancement moving forward.