Economic growth to slip at 6.3-6.8%: FM Sitharaman tables Economic Survey 2024-25 ahead of Budget presentation
According to the Economic Survey 2024-25 presented in Parliament on Friday, India’s economy is expected to achieve a growth rate between 6.3 per cent and 6.8 per cent in FY26.
The country maintains robust economic fundamentals, bolstered by a healthy external account, progressive fiscal consolidation and sustained private consumption.
The government’s strategy involves boosting long-term industrial development through emphasis on research and development (R&D), micro, small, and medium enterprises (MSMEs), and capital goods sectors to boost efficiency, creativity and international competitiveness.
It stated “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”.
The report indicates that Q4 FY25 should see reduced food inflation, attributed to seasonal vegetable price reductions and Kharif harvest arrival. Additionally, anticipated good Rabi yields should help control food prices in early FY26, though climate issues and rising global agricultural prices pose inflation risks.
The outlook for core inflation remains steady, supported by reduced global energy and commodity prices, although global political and economic uncertainties continue to present challenges.
India’s foreign exchange position remains robust, with reserves sufficient to cover 90 per cent of external debt and over ten months of imports. Reserves grew from USD 616.7 billion in January 2024 to USD 704.9 billion in September 2024, before settling at USD 634.6 billion by January 3, 2025. Steady capital flows have reinforced India’s external position.
The formal employment sector shows remarkable progress, with net Employees’ Provident Fund Organisation (EPFO) registrations showing substantial increase.
It stated “The formal sector in India has seen significant growth, with net Employees’ Provident Fund Organisation (EPFO) subscriptions more than doubling from 61 lakh in FY19 to 131 lakh in FY24”.
The survey forecasts optimistic economic prospects for FY26, supported by strong macroeconomic indicators, expanding formal employment and stable external reserves.
Nevertheless, the economy faces notable challenges including global uncertainties, weather-related disruptions and international price variations in the upcoming year.
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