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‘The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption,’ says the Economic Survey 2024-25.
The Economic Survey 2024-25 says there are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides, too.
The Economic Survey 2024-25, tabled by Finance Minister Nirmala Sitharaman on Friday in the Lok Sabha, expects the Indian economy to grow 6.3-6.8 per cent in the financial year 2025-26. The FY26 GDP growth projection is in line with the International Monetary Fund’s 6.5 per cent forecast. However, it is lower than the World Bank’s 6.7 per cent estimate.
“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,” according to the latest Economic Survey 2024-25, which is authored by a team led by India’s Chief Economic Advisor V Anantha Nageswaran.
The Survey also said that on the domestic front, rebounding rural demand augurs well for consumption. Investment activity is expected to pick up, supported by higher public capex and improving business expectations.
According to the first advance estimates released by the government on January 7, the Indian economy will likely grow 6.4 per cent in 2024-25.
On inflation, the Economic Survey 2025-26 said good rabi production is likely to contain food prices in the first half of FY26. However, adverse weather events and rise in international agricultural commodity prices pose risks to food inflation.
In November 2024, the latest available official data, India’s CPI inflation stood at a three-month low of 5.22 per cent.
According to the document, “Food inflation is likely to soften in Q4 FY25 with the seasonal easing of vegetable prices and Kharif harvest arrivals. Good Rabi production is likely to contain food prices in the first half of FY26. Adverse weather events and rise in international agricultural commodity prices, however, pose risks to food inflation. Global energy and commodity prices have softened in the recent past, making the core inflation outlook benign. However, risks remain on account of significant global political and economic uncertainties.”
The Survey said there are many upsides to domestic investment, output growth and disinflation in FY26. “There are equally strong, prominently extraneous, downsides too.”
On the global economy, navigating global headwinds will require strategic and prudent policy management and reinforcing the domestic fundamentals. The Budget 2024-25 laid out a multisectoral policy agenda for sustained growth push, said the Survey.
The Economic Survey is released a day before the presentation of the Union Budget. Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025-26 on Saturday.
In the second quarter ended September 2024 (Q2 FY25), India’s GDP growth slowed to a two-year-low pace at 6.5 per cent amid a disappointing manufacturing performance and a capex slowdown.
In the first half of the year, the economy grew 6 per cent and will have to log 6.8 per cent growth in the second half to reach the government’s estimate.
