The Economic Survey, released a day before the Union Budget, assesses India’s economic performance over the past year, providing detailed statistical data of all the sectors, industries, agriculture, employment, prices, and exports among others. This year, it has been prepared by the economic division of the Department of Economic Affairs (DEA), headed by Chief Economic Advisor (CEA). V. Anantha Nageswaran.
Economy
According to the survey, despite global uncertainty, Indian economy remains resilient with real GDP growth of 6.4% in the financial year 2024-25 (as per first advance estimates of national income) All sectors will contribute to growth, with agriculture sector consistently operating well above trend levels. The industrial sector has also found its footing above the pre-pandemic trajectory, while the robust rate of growth in recent years has taken the services sector close to its trend levels.
Inflation
Retail headline inflation softened from 5.4% in the financial year 2023-24 to 4.9% during the April-December period of 2024-25. Despite challenges, there are positive signs for inflation management, says the survey. The Reserve Bank of India has projected that India’s consumer price inflation will gradually align with the target of around 4 per cent in FY26.
FPI & FDI
Foreign portfolio investments (FPIs) have shown a mixed trend in 2024-25. Uncertainty in the global markets and profit taking by foreign portfolio investors led to capital outflows, however, strong macroeconomic fundamentals, have kept FPI flows positive overall. Meanwhile, gross foreign direct investment (FDI) inflows have shown signs of revival in the first eight months of 2024-25, though net FDI inflows declined relative to April-November 2023 due to a rise in repatriation/disinvestment.
Banking Sector
Commercial banks have reported a consistent decline in their gross non-performing assets (GNPA) ratio “from its peak in FY18 to a low of 2.6 per cent at the end of September 2024,” according to the survey. The credit-GDP gap also narrowed to 0.3% in the first quarter of 2024-25 from -10.3% in the same quarter of the previous year, which indicates sustainable growth in bank credit.
Exports
India’s total exports (merchandise and services) have registered a steady growth in the first nine months of FY25, reaching USD 602.6 billion (6 per cent). “The evolving global trade dynamics, marked by gradual shifts towards greater protectionism, require assessing the situation and developing a forwardlooking strategic trade roadmap. By adapting to these trends and leveraging its strengths, India can accelerate its growth and enhance its presence in global trade,” the survey read.
MSMEs
The growth in agriculture credit in the current financial year was 5.1% while, the growth in industrial credit stood at 4.4% as of the end of November 2024, higher than 3.2% recorded a year ago. Across industries, bank credit to micro, small, and medium enterprises (MSMEs) have been growing faster than credit disbursal to large enterprises. As of the end of November 2024, credit to MSMEs registered a yearon- year growth of 13%, whereas it stood at 6.1% for large enterprises. Amongst the services sector, the moderation has been driven by a slowdown in credit disbursal to NBFCs.
Loans
Credit growth to the services and personal loans segments moderated to 5.9% and 8.8% respectively, as of the end of November 2024 in the current financial year. Vehicle and housing loans drove the moderation in the personal loans segment. In terms of increasing risk weights to NBFCs and credit cards, RBI’s policy interventions contributed to the moderation of credit growth in those segments.
Infrastructure
Infrastructure sector is a key focus, but private players must participate more as per the Survey. “Building infrastructure physical, digital and social - has been a central focus area for the Government in the last five years. This has had various dimensions – increase in public spending on infrastructure, creation of institutions to de-bottleneck approvals and execution and innovative modes of resource mobilization. In FY25, capital expenditure has gathered momentum postelections,” the survey read.
Real Estate
India’s real estate market witnessed robust performance driven by economic stability and positive market sentiment. The Economic Survey noted that housing demand in India is expected to touch 93 mn units by 2036. RERA and GST have brought many benefits to the realty sector.
“The real estate sector has performed well, driven by strong housing and office demand across the country. According to the Economic Survey, this growth is fueled by economic stability, positive market sentiment, and the expansion of physical infrastructure such as metro networks, roads, and improved connectivity, not just in Tier 1 and Tier 2 cities but nationwide. The demand for real estate is emerging not only in tier 1 and tier 2 cities but across the country due to the expansion of metro networks, enhancement of road networks, and improvements in connectivity,” the Economic Survey said.
The Survey stated that the real estate laws RERA & GST have brought many benefits to the real estate sector, including protection against fraud, increased transparency, timely project deliveries, and measures to prevent misuse of funds, among other benefits. After the enactment of the Real Estate Regulatory Authority, India ranked 31st out of 89 countries in the Global Real Estate Transparency Index in 2024, it said.
The Survey also noted that the Goods and Services Tax (GST) has helped to simplify the taxation structure in real estate transactions by applying a single unified tax system across states. It has encouraged proper invoicing and documentation, thus reducing the scope for tax evasion. The Economic Survey observed that the rise of real estate investment trusts (REITs) further amplifies the positive trajectory of the commercial sector. “The government introduced REITs as an investment vehicle in commercial real estate, allowing investors to pool funds and invest in incomegenerating real estate. This helps increase commercial real estate market liquidity and attracts institutional investors,” it noted.
“Implementation of online platforms for the submission and approval of building plans has led to a reduction in delays and brought more transparency to the process. The digital India land records modernization program aims to create a comprehensive, accessible, and transparent land record management system,” the survey added.
Call For Deregulation To Drive Growth
“A fundamental pre-requisite is to accelerate and amplify the deregulation agenda already underway in the last ten years and work towards giving people back their agency and enhancing the economic freedoms of individuals and organizations. This is to upgrade the capacity and know-how of component manufacturers, increasing the availability of trained human resources, addressing resource bottlenecks and regulatory impediments to accelerate India’s gross fixed capital formation. The government has recognized the importance of continuing the pace of infrastructure building and the increasing need to promote sustainable construction practices. However, “It is also clear that public capital alone cannot meet the demands of upgrading the country’s infrastructure. We need to ensure increasing private participation in infrastructure by improving their capacity to conceptualize projects and their confidence in risk and revenue-sharing mechanisms, contract management, conflict resolution and project closure. The efforts of the Union Government would need to be supplemented with wholehearted acceptance of the need for public-private partnerships in infrastructure across the country,” the survey stated.
The government has recognized the importance of continuing the pace of infrastructure building and the increasing need to promote sustainable construction practices. However, “It is also clear that public capital alone cannot meet the demands of upgrading the country’s infrastructure. The survey cautioned about elevated valuations and optimistic investor sentiments with the likelihood of a meaningful market correction in 2025. “If the US market corrected, it could trigger a cascade of effects in India, especially with the growing number of retail investors,” it stated.
Potential Risks
The Economic Survey highlighted several risks that may affect Indian economy. The Economic Survey drew attention to the current state of the US stock market, which as of 2024, were at record high, despite the ongoing geopolitical tensions, and largely driven by the growth of major tech companies like Apple, Microsoft, and Nvidia. Investor sentiment in the US had reached all-time highs, driven by extreme optimism. But as history showed, sentiment-driven rallies can be fragile, with confidence shifting rapidly in response to external shocks. This could have a ripple effect on global markets including India. The survey shared concern that the Indian market was highly sensitive to US market movements as Indian markets tended to react more to trends originating in the US, and any significant downturn in the US could have a bigger impact on India than vice versa.
The survey also noted that In India, there had been a notable rise in retail investor participation in the stock market. In the last five years (2020-24), individuals had invested a net amount of Rs 4.4 lakh crore in the NSE’s cash market segment. This surge in investment helped Indian markets become more resilient, particularly during periods of foreign portfolio investor (FPI) outflows. However, the Economic Survey warned that many of these investors that had entered the market post-pandemic had never witnessed a significant and prolonged market correction.
The Economic Survey is a comprehensive review of India’s development over the past financial year — based on analyzing Indian economy and government policies performance. The document also gives the outlook for the upcoming financial year.
The report is divided into two sections
Part A: Covers macroeconomic trends, fiscal policies, and sectoral performance.
Part B: Examines socio-economic challenges, trade balances, and foreign exchange reserves.
