The Economic Survey for 2024-25 estimated GDP to grow in the range of 6.3 per cent and 6.8 per cent. The Economic Survey, tabled in the Parliament by Finance Minister Nirmala Sitharaman stated that while there are many upsides, there are many headwinds to be taken into account as well.
“There are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides too. Nonetheless, the fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent,” it said.
The Economic Survey stated that navigating global headwinds will require strategic and prudent policy management, and reinforcing the domestic fundamentals. It called for reforms at the grassroots level to improve the overall competitiveness of the economy and to lift trend growth rates.
It said that there is a steady growth trajectory shaping global outlook for 2024, though regional patterns vary. Near-time global growth is expected to be a shade lower than the trend level, it said. There is notable resilience in India when it comes to the services sector.
Globally, inflationary pressures have shown signs of easing, yet the threat of synchronised price pressures persists due to potential geopolitical disruptions, including tensions in the Middle East and the ongoing Russia-Ukraine conflict. In response, central banks worldwide have adopted more accommodative monetary policies. However, the rate at which interest rates are being cut varies across regions, influenced by growth imperatives and the pace of disinflation. This has led to potential divergences in economic recovery, it said.
Domestically, there is positive news as rural demand rebounds, which bodes well for consumption. Investment activity is expected to increase, driven by higher public capital expenditure and improving business expectations. Capacity utilisation in the manufacturing sector remains above the long-term average, and private sector order books have exhibited steady growth, along with a rise in investment intentions. However, these gains may be moderated by global excess capacities in sectors like steel, prompting aggressive trade policies in search of demand.
Looking ahead, food inflation is anticipated to soften in the fourth quarter of FY25, aided by the seasonal easing of vegetable prices and the arrival of the Kharif harvest. A good Rabi production is expected to keep food prices in check during the first half of FY26. Nevertheless, adverse weather events and rising international agricultural commodity prices pose risks to food inflation. Although global energy and commodity prices have recently softened, making the core inflation outlook more benign, significant global political and economic uncertainties continue to pose risks.