Hindu Editorial Analysis : 1-February-2025

The Economic Survey 2024-25 presents a detailed outlook on India’s economic trajectory, offering insights into the country’s growth prospects and strategies to sustain its economic momentum. It provides realistic projections, factoring in both global challenges and domestic conditions, to chart a path forward.

State of the Economy

India’s economic performance in FY25 is estimated to grow at a real GDP rate of 6.4%. This aligns with the country’s decadal average and is close to the lower end of the growth projection for FY24, which was between 6.5% and 7%.

The forecast for FY26 anticipates a growth rate between 6.3% and 6.8%. Despite global economic uncertainty, India’s growth is expected to be steady, supported by the projections of international institutions like the IMF and the Asian Development Bank, both estimating a 7% growth rate. The key to maintaining growth is leveraging India’s demographic dividend and implementing regulatory reforms.

Strategic Recommendations for India’s Future

To become a “Viksit Bharat” (Developed India) by 2047, India must accelerate its growth rate to 8% annually for the next two decades. To achieve this goal, the Economic Survey recommends:

  • Increasing investment: The current investment rate is around 31% of GDP, and it must rise to 35%.
  • Infrastructure and reforms: Significant investment in infrastructure and business environment improvements are crucial.
  • Regulatory reforms: The survey emphasizes the importance of enhancing the Ease of Doing Business (EoDB) through state-led initiatives, targeting critical areas such as land acquisition, labor laws, and logistics.
FDI and Foreign Investment Challenges

The survey warns against over-reliance on foreign investments to bridge India’s investment gap. It suggests that boosting domestic savings and reducing government dis-saving are essential to maintaining a sustainable current account deficit level.

Global Headwinds and Trade Policy

The global growth outlook is weaker than in previous decades, with geopolitical tensions and challenges like China’s manufacturing dominance potentially impacting India’s export growth. The survey recommends the strategic use of tariffs to encourage industrial growth in priority sectors.

Inflation and Inequality

Retail inflation in FY24 decreased to 5.4%, down from 6.7% in FY23, thanks to effective government policies. However, the survey highlights growing income inequality in India, with the top 1% earning a significant share of national income. Addressing this inequality involves job creation, formalizing the informal sector, and increasing female workforce participation.

Employment and Skill Development

The Economic Survey also points out that India needs to generate 7.85 million non-farm jobs annually until 2030 to accommodate its growing workforce. Skill development is essential as a significant portion of Indian graduates are not immediately employable.

Why In News

The Economic Survey 2024-25 projects a GDP growth rate for the fiscal year 2025-26, offering a comprehensive and realistic assessment of India’s economic trajectory, while factoring in both domestic growth drivers and global uncertainties that could influence the nation’s economic performance.

MCQs about Economic Survey 2024-25
  1. According to the Economic Survey, which of the following is essential for India to maintain its long-term economic growth?
    A. Increased foreign investments only
    B. Deregulation measures and demographic dividend
    C. A decrease in domestic savings
    D. Reducing infrastructure investments
    Correct Answer: B. Deregulation measures and demographic dividend
    Explanation: The Economic Survey highlights the importance of leveraging India’s demographic dividend and implementing deregulation measures to sustain long-term growth.
  2. What is the primary recommendation of the Economic Survey for improving India’s business environment?
    A. Reducing foreign investments
    B. Promoting regulatory reforms through state-led initiatives
    C. Increasing corporate taxes
    D. Limiting infrastructure projects
    Correct Answer: B. Promoting regulatory reforms through state-led initiatives
    Explanation: The Economic Survey emphasizes the need for the Ease of Doing Business (EoDB) 2.0 to be a state-led initiative, focusing on critical sectors like land acquisition, labor laws, and logistics.
  3. According to the Economic Survey 2024-25, how many non-farm jobs must India generate annually until 2030 to accommodate its growing workforce?
    A. 5.5 million
    B. 7.85 million
    C. 10 million
    D. 6 million
    Correct Answer: B. 7.85 million
    Explanation: The survey highlights that India needs to generate approximately 7.85 million non-farm jobs annually until 2030 to accommodate its growing workforce and meet employment demands.

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