The Economic Survey 2025, presented by Finance Minister Nirmala Sitharaman in Parliament, projects India's GDP growth in the range of 6.3-6.8% for the financial year 2025-26. This marks a continued resilience in the Indian economy despite prevailing global uncertainties. Notably, this survey comes within six months of the previous Economic Survey 2022-23, which was presented in July 2024 after the General Elections.
Steady GDP Growth and Sectoral Performance
According to the survey, India&rsquo;s real GDP growth for FY 2024-25 is estimated at 6.4%, aligning closely with the country's decadal average. From an aggregate supply perspective, real gross value added (GVA) is also projected to grow at 6.4% for the year.
All key sectors of the economy&mdash;agriculture, industry, and services&mdash;have demonstrated robust performance. The agriculture sector continues to operate above trend levels, ensuring food security and rural stability. The industrial sector has regained its pre-pandemic growth trajectory, driven by manufacturing and infrastructure expansion. Meanwhile, the services sector, a major contributor to GDP, has recovered strongly and is now close to its historical growth trend.
Inflation Trends and Monetary Policy Outlook
Retail headline inflation has softened from 5.4% in FY 2023-24 to 4.9% during the April-December period of FY 2024-25. The survey highlights that inflationary pressures have eased due to improved supply chains and proactive monetary measures taken by the Reserve Bank of India (RBI).
Despite short-term volatility, both the RBI and the International Monetary Fund (IMF) anticipate that India&rsquo;s consumer price inflation will gradually align with the 4% target by FY 2025-26, ensuring price stability for consumers and businesses.
External Sector: Foreign Investments and Forex Reserves
The balance of payments position remains "comfortable," with foreign direct investment (FDI) inflows showing resilience despite repatriation pressures. According to Chief Economic Adviser (CEA) V. Anantha Nageswaran, the revival of gross FDI inflows in the first eight months of FY 2024-25 is a positive sign, although net FDI inflows have declined compared to the previous year due to an increase in repatriation and disinvestment by foreign investors.
Foreign portfolio investments (FPI) exhibited a mixed trend in FY 2024-25, influenced by global market uncertainty and profit-taking activities by foreign investors. However, India&rsquo;s strong macroeconomic fundamentals, favorable investment climate, and high economic growth prospects have ensured positive net FPI flows overall.
India's foreign exchange reserves peaked at $706 billion in September 2024 and stood at $640.3 billion as of December 27, 2024. This reserve level covers approximately 89.9% of India's external debt, reinforcing financial stability and investor confidence.
Banking and Financial Sector Strength
The Indian banking sector has witnessed a significant improvement in asset quality. The gross non-performing assets (GNPA) ratio of commercial banks has declined to 2.6% as of September 2024, down from its peak levels in FY 2018. This marks a major success in the banking sector&rsquo;s efforts to reduce bad loans and strengthen financial stability.
Moreover, the credit-GDP gap has narrowed substantially to 0.3% in the first quarter of FY 2024-25 from -10.3% in the same period of the previous year. This indicates that the recent expansion in bank credit is sustainable and not driven by excessive risk-taking.
The insurance sector has also expanded, with total premiums growing by 7.7% in FY 2023-24, reaching ₹11.2 lakh crore. Additionally, the total number of pension subscribers increased by 16% year-on-year as of September 2024, reflecting improved financial inclusion and long-term savings.
Resilient Growth Amid Global Challenges
The Economic Survey 2025 underscores India's strong economic fundamentals, steady growth, and resilience amid global headwinds. With controlled inflation, a stable banking sector, and robust external accounts, India remains well-positioned to sustain its economic momentum in the coming years.
While challenges persist, including global market volatility and geopolitical uncertainties, the survey reaffirms confidence in India&rsquo;s ability to navigate these headwinds effectively. As the country prepares for the Union Budget 2025, policymakers and investors will closely watch how fiscal strategies align with the optimistic projections outlined in the survey.

Finance Minister Nirmala Sitharaman presenting Economic Survey 2025 in the house

Survey forecasts 6.3-6.8% GDP growth, steady FDI, lower inflation, and strong banking health

India's Economic Survey 2025: Growth, Stability & Trends

Survey forecasts 6.3-6.8% GDP growth, steady FDI, lower inflation, and strong banking health

January 31, 2025 | 15:16 IST