Other BriefingsEconomic Survey of India 2024-25: Key Highlights
The Economic Survey of India 2024-25 presents an optimistic outlook for India’s economic growth, emphasizing resilience, reforms, and infrastructural progress. Despite global uncertainties, India’s proactive policy measures and focus on long-term economic transformation position it as a robust player in the global economy.
India’s Minister of Finance and Corporate Affairs, Nirmala Sitharaman, presented the Economic Survey 2024-25 in the Parliament today, outlining the country’s economic trajectory and policy directions for the upcoming fiscal year 2025-26. The survey provides a comprehensive analysis of India’s growth trends, monetary policies, external trade, infrastructure development, and industry performance, among other critical areas.
Highlights of the Economic Survey of India 2024-25
State of the economy: Accelerating growth amid challenges
India’s real GDP growth for FY 2024-25 is projected at 6.4 percent, aligning with its decadal average. The real gross value added (GVA) is also expected to grow at the same rate. While the global economy grew by 3.3 percent in 2023, the IMF projects a 3.2 percent growth rate over the next 5 years. For FY 2025-26, India’s GDP growth is forecasted to range between 6.3 percent and 6.8 percent, depending on external factors. The survey underlines India’s commitment to structural reforms and deregulation to strengthen its medium-term growth potential.
However, geopolitical tensions, global trade risks, and ongoing conflicts remain significant concerns. Inflationary trends indicate a decline, with retail headline inflation reducing from 5.4 percent in FY24 to 4.9 percent in April–December 2024. Capital expenditure has consistently improved, with an 8.2 percent year-on-year increase post-general elections (July–November 2024). India also maintains its position as the seventh-largest global exporter of services, reflecting its strong competitiveness in the sector.
Private consumption and investment remain crucial drivers of economic growth. Rural demand is showing signs of recovery, supported by higher agricultural output and government welfare measures. Urban consumption continues to be robust, driven by increased disposable incomes, a thriving services sector, and improved employment prospects. Meanwhile, government spending on social infrastructure, including healthcare and education, remains a priority to ensure inclusive growth.
Monetary and financial sector: Stability and strength
The Indian banking sector has shown resilience, with steady credit growth and improving profitability. The gross non-performing assets (GNPAs) of scheduled commercial banks fell to a 12-year low of 2.6 percent by September 2024, while the capital to risk-weighted asset ratio (CRAR) strengthened. Credit growth outpaced nominal GDP growth for two consecutive years, indicating a sustainable lending environment.
The stock markets outperformed emerging market peers despite election-driven volatility, and primary market mobilization from equity and debt reached INR 11.1 trillion, marking a 5 percent increase from FY 2023-24. Additionally, India’s insurance and pension markets experienced steady expansion, with total insurance premiums rising by 7.7 percent and pension subscriptions growing by 16 percent year-on-year. The growing fintech ecosystem is further enhancing financial inclusion, with digital transactions witnessing exponential growth across urban and rural areas.
External sector: Trade and FDI performance
India’s external sector remains resilient despite global uncertainties. Overall exports (merchandise and services) grew by 6 percent year-on-year in the first 9 months of FY25, with services exports rising by 11.6 percent. India continues to be the second-largest global exporter in ‘Telecommunications, Computer, & Information Services,’ with a 10.2 percent market share. The current account deficit (CAD) stood at 1.2 percent of GDP in Q2 FY25, supported by rising net services receipts and increased private transfer receipts.
Gross foreign direct investment (FDI) inflows revived, increasing 17.9 percent year-on-year to US$55.6 billion in the first eight months of FY25. Forex reserves stood at US$640.3 billion at the end of December 2024, covering 10.9 months of imports and 90 percent of external debt. FDI inflows into India exceeded US$1 trillion between April 2000 and September 2024, reinforcing the country’s status as a secure and prominent global investment hub. India’s strategic trade agreements, including those with the UAE, Australia, and the European Union, are expected to further boost exports and attract foreign investment in key sectors such as renewable energy, manufacturing, and digital infrastructure.
The Economic Survey 2024-25 highlights that the services sector remained the largest recipient of FDI, accounting for 19.1 percent of total equity inflows in H1 FY25. Other key sectors attracting foreign investments included computer software and hardware (14.1 percent), trading (9.1 percent), non-conventional energy (7 percent), and cement & gypsum products (6.1 percent). Despite short-term global market volatility driven by inflationary pressures, rising interest rates in developed economies, and geopolitical tensions, the Survey maintains that India’s long-term FDI outlook remains positive. It attributes this optimism to the country’s strong economic fundamentals, ongoing structural reforms, and expanding consumer market, which continue to position India as a key investment destination.
Addressing concerns over recent scrutiny of declining FDI inflows, the Survey notes that global FDI flows have been impacted by economic uncertainty, geopolitical tensions, and rising borrowing costs. It further explains that while gross FDI inflows into India have increased, repatriations have also risen, as international investors realize returns through secondary sales and Initial Public Offerings, driven by India’s strong stock market. This, the Survey argues, reflects investor confidence rather than capital flight. Additionally, it underscores that the depth and resilience of India’s capital market provide profitable exit opportunities for direct investors, further strengthening the investment climate.
Investment and infrastructure: Driving economic expansion
The government continues its infrastructure development push, with capital expenditure on key sectors growing at 38.8 percent from FY20 to FY24. Rail and road connectivity improved significantly, with 2,031 km of new railway lines commissioned and 5,853 km of national highways constructed by December 2024. Port efficiency has also increased, reducing the average container turnaround time from 48.1 hours in FY24 to 30.4 hours in FY25.
Renewable energy capacity grew by 15.8 percent year-on-year, with renewables now accounting for 47 percent of India’s total installed capacity. The expansion of solar and wind energy projects, along with the Green Hydrogen Mission, underscores India’s commitment to achieving net-zero emissions by 2070. Government initiatives, including the rollout of 5G and rural electrification programs, have further enhanced digital and energy access. The National Logistics Policy and the development of multimodal transport networks are also expected to lower logistics costs and improve trade efficiency.
Industry, services, and real estate sectors: Key contributors
The industrial sector is projected to grow by 6.2 percent in FY25, driven by strong performance in electricity and construction. Domestic electronics manufacturing continues to expand, with smartphone production reaching 99 percent localization. The pharmaceutical sector maintained steady growth, with a total annual turnover of INR 4.17 trillion. MSMEs have emerged as a key economic driver, with government initiatives such as the Self-Reliant India Fund (INR 500 billion) supporting their growth.
The services sector remains a crucial contributor to the economy, accounting for 55.3 percent of gross value added (GVA) in FY25. Services exports surged by 12.8 percent year-on-year, with information and computer-related services experiencing consistent double-digit growth over the past decade. Tourism and hospitality have also rebounded strongly post-pandemic, with foreign tourist arrivals increasing by 18.5 percent in FY25.
The real estate sector witnessed renewed growth, with housing demand increasing across urban centers. Government incentives for affordable housing, coupled with lower interest rates, have fueled demand. In the retail sector, e-commerce penetration continues to rise, with online sales accounting for nearly 10 percent of total retail trade. The rise of quick-commerce platforms and digital payment adoption is further driving growth in consumer markets.
India’s medium-term economic outlook: Policy focus on deregulation and ease of doing business
The Economic Survey 2024-25 highlights the need for systemic deregulation to enhance India’s long-term growth prospects. Achieving the vision of ‘Viksit Bharat’ by 2047 requires a sustained 8 percent annual growth rate. The government aims to improve the business environment under ‘Ease of Doing Business 2.0’ and support the SME sector’s growth. Regulatory reforms at the state level, including risk-based compliance and tariff reductions, are key priorities to facilitate investment and economic expansion.
Key structural reforms, including labor law simplification, tax rationalization, and digital governance initiatives, will be instrumental in improving India’s investment climate. The focus on human capital development through skill enhancement programs and higher education reforms is also expected to drive productivity and innovation.
How foreign investors can read the Economic Survey of India 2024-25 findings
The Economic Survey 2024-25 provides a strategic outlook on India’s economic trajectory, offering key insights into macroeconomic trends, policy directions, and sectoral developments that shape the investment landscape. As India continues its pursuit of a high-growth trajectory, the survey findings show the resilience of its economy, driven by relatively strong domestic consumption, infrastructure expansion, and targeted policy reforms.
A key takeaway is India’s sustained GDP growth, which remains among the fastest in major economies, underpinned by its expanding industrial output, a thriving services sector, and ongoing digital transformation. The government’s continued focus on fiscal prudence, capital expenditure, and supply chain resilience further reinforces India’s appeal as an investment destination.
The survey highlights significant policy measures aimed at boosting manufacturing and exports through initiatives like the Production-Linked Incentive (PLI) scheme and trade facilitation programs. The push towards sustainable growth, marked by increased investments in renewable energy, electric mobility, and green financing, aligns with global ESG priorities, presenting opportunities for foreign investors looking at India’s sustainability-driven sectors.
Structural reforms in taxation, ease of doing business, and FDI policies continue to enhance India’s competitive position. The government’s emphasis on infrastructure modernization, including logistics, smart cities, and digital connectivity, creates a robust foundation for long-term economic expansion.
For international businesses evaluating market entry or expansion, the Economic Survey serves as a crucial guide, detailing sector-specific growth drivers, regulatory shifts, and investment incentives. With a favorable demographic dividend, technological advancements, and evolving consumer behavior, India remains a compelling destination for capital deployment across key industries such as fintech, healthcare, manufacturing, and digital services.
Navigating India’s evolving business environment requires strategic planning and an informed approach. The insights from the Economic Survey 2024-25 equip foreign investors with the necessary intelligence to capitalize on emerging opportunities while mitigating potential risks in this dynamic and fast-growing economy. For business inquiries on entering the Indian market or expanding a commercial presence, feel free to contact our experts at India@dezshira.com.
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