India's Economy Set To Grow At 6.4 Per Cent In FY25 Amid Global Uncertainty, Says Economic Survey 2024-25

India's economy is projected to expand by 6.4 per cent in FY25, driven by robust rural demand, services sector growth, and macroeconomic stability, according to the Economic Survey 2024-25.

Despite global headwinds such as geopolitical conflicts, trade uncertainties, and weak global demand, the survey predicts that India remains on a steady growth path.

Global Economic Landscape

The report highlights moderate but uneven global growth, with the IMF projecting 3.2 per cent growth in 2024 and 3.3 per cent in 2025.

While the US economy remains resilient, the Eurozone struggles with sluggish manufacturing.

In Asia, China's growth slowed due to weak consumption and real estate challenges, while Japan faced supply disruptions.

Inflationary pressures have eased globally, but services inflation remains persistent.

Geopolitical risks, including the Russia-Ukraine conflict and tensions in the Middle East, continue to threaten economic stability.

Here are the key takeaways from the Economic Survey:

India’s Growth Drivers

• Agriculture Resilience: A record Kharif production and favorable monsoons have boosted rural demand, supporting overall consumption.

• Strong Services Sector: The services sector grew by 7.1 per cent in H1 FY25, led by financial services, real estate, and hospitality.

• Manufacturing Faces Challenges: Growth slowed due to weak export demand, trade policies, and seasonal disruptions, though a post-monsoon recovery is expected.

• Macroeconomic Stability: Fiscal discipline, a strong external trade balance, and healthy remittance inflows have helped maintain stability.

Inflation & Trade Outlook

• Retail Inflation Moderates: CPI inflation softened to 4.9 per cent (April-December 2024), aided by declining core inflation. However, food inflation remains a concern, driven by vegetables and pulses.

• Exports and Remittances Bolster External Sector: While merchandise exports grew by just 1.6 per cent, services exports surged, making India the 7th largest services exporter globally. Remittances hit a record high, keeping the current account deficit at a modest 1.2 per cent of GDP.

Investment & Fiscal Trends

• Private Consumption Grew 6.7 per cent in H1 FY25, mainly due to rising rural demand.

• Investment Growth Slowed to 6.4 per cent, impacted by election-related delays in government capex and cautious private investment.

• Union Government's Fiscal Discipline Strong, with higher tax revenues and increased state tax devolution.

• States' Finances Show Mixed Trends, though capex is expected to recover in H2 FY25.

Challenges & Future Outlook

The survey identifies geopolitical tensions, trade disruptions, and commodity price volatility as key risks.

Going forward, India's economic momentum will depend on private capex revival, corporate wage growth, and rural consumption trends.

Structural reforms, deregulation, and improved global competitiveness will be crucial in sustaining medium-term growth.

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