Economic Survey 2025 Highlights: Economic Survey bets on growth and consumption! Fiscal Deficit, forex reserves improve

Atul Pandey, Partner at Khaitan & Co

“The Economic Survey rightly underscores the need for deregulation, particularly from a regulatory compliance standpoint. While the government has introduced several reforms to enhance the ease of doing business, the reality remains that many companies continue to struggle with compliance at the local level. This, in turn, escalates compliance costs—an issue that is particularly critical for MSMEs.

Piyush Doshi, Operating Partner at the Foundation for Economic Development

"One of the most important aspects of this economic survey is its emphasis on deregulation as a critical enabler of investment and growth. The survey systematically lays out examples of opportunities for deregulation around critical factors of production like land, building, labour, logistics and utilities. If the government is able to follow through on these ideas, investor confidence will soar, cost of doing business will come down, global competitiveness will increase and animal spirits will truly be unleashed."

DK Srivastava, Chief Policy Advisor, EY India

"The survey underlines the need for maintaining a real GDP growth of 8% up to 2046-47 for achieving a Viksit Nation status. This would call for raising the current nominal investment rate of about 31-35%. Further, there is a need to invest in emerging technologies including AI, robotics, and biotechnology and also create new non-farm jobs at the rate of 7.85 million annually till 2030 and achieve 100% literacy.

"Going forward, dependence on fiscal deficit needs to be reduced and that on revenue receipts requires to be increased in order to make this level of general government expenditure sustainable. According to the survey, India will face continued challenges in its endeavour to increase its share of manufacturing which is currently only 2.8% of global manufacturing as compared to China’s 28.8%. In the presence of excess manufacturing capacities across the world, India must carefully choose areas for its policy thrust."

India's foreign exchange reserves halted a seven-week losing streak and rose to $629.56 billion as of Jan. 24, coming off near 11-month lows, data from the central bank showed on Friday, as pressure on the rupee eased. The reserves rose by $5.58 billion in the reported week, the biggest increase in four months.

India's fiscal deficit stood at Rs. 9.1 trillion or 57% of the FY25 estimates in first 9 months of of FY2025, Though significant, it is lower than the Rs. 9.8 trillion recorded in same period in FY2024.

Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA
"The Government of India's (GoI's) fiscal deficit stood at Rs. 9.1 trillion or 57% of the FY25 estimates in April-December FY2025, lower than the Rs. 9.8 trillion recorded in April-December FY2024. In April-December FY2025, the net tax revenues rose by 6.5% YoY (dampened by the additional devolution of taxes to the states), non-tax revenues expanded by 43% boosted by the RBI dividend, and revenue expenditure grew by 7.0%, while capex rose by a relatively muted 1.7%."

Jaspreet Singh, Partner at Grant Thornton Bharat on the implications of the Economic Survey on business

"With a deep STEM talent pool and expanding leadership roles, GCCs are not only shaping the future of industries but also creating high-value jobs and fostering technological self-reliance. Their continued growth will accelerate digital transformation, enhance global competitiveness, and position India as a key player in next-generation innovation. As businesses centralize strategic functions here or even move the entire piece to India, India’s GCCs will play a critical role in defining the future of global enterprises."

The markets rallied in afternoon trade as the street gave a thumbs up to CEA's call for deregulation at both Centre and State level.

Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA

"In our view, the real GDP growth forecast of 6.3-6.8% made by the Survey suggests that the Union Budget is likely to build in a nominal growth of 10% for FY26. We believe that assumptions around the tax revenue would be anchored to a similar nominal growth print, when the Union Budget for FY2026 is presented tomorrow."

Vivek Jalan, Partner Tax Connect Advisory Services LLP

The economic survey emphasizes on deregulation and simplification of business procedures as a compulsion rather than as an option in the current day geo-political environment. This can be done by reducing layers of operational conditions to policies to prevent abuse and making them incomprehensible and complicated. Therefore simplification of TDS/TCS in norms in Income Tax, MOOWR/IGCR Scheme in Customs and of course simplification of GST is what seems on the anvil in the budget going forward among other policy changes.

Due to geo-political conditions India’s export is expected to be tepid and India will have to press the levers on domestic consumption as well as manufacturing for growth. However, India’s manufacturing of raw materials, components, parts, etc is far from self-sufficient and hence its dependence on global supply chains create a road block. Much more push needs to be given to manufacturing raw materials, components, parts, etc. Green mobility should be the focus area.

Rumki Majumdar, Economist, Deloitte India on Banking, Financial sector

"A strong financial sector is the bedrock of economic confidence, and India's banking sector has demonstrated remarkable resilience with GNPA falling to 2.6% and returns on asset doubling to 1.4%. Despite FII outflows comparable to the Covid-19 period, India’s market capitalization-to-GDP ratio surged to 136%of GDP by December 2024 (from 124% of GDP last year), outpacing other emerging economies. This signals growing investor confidence and a more dynamic capital market. However, with corporate bonds accounting for just 18% of GDP—far below Korea’s 80% and China’s 36%—deepening the corporate debt market is critical. Expanding this segment would reduce reliance on bank loans, lower borrowing costs, and create a more diversified and resilient financial system for long-term, inclusive growth."

Economic Survey highlighted tat the Capex growth between July-November, 2024 at 8.2% and expected to pick up further pace.

The Economic survey highlights that unemployment rate has been trending lower. It observes that the all India unemployment is down to 3.2 per cent in 2023-24 from 6 per cent in 2017-18. Additionally, Urban unemployment rate (UR) for people aged 15 years and above has dropped to 6.4 per cent in Q2 FY25 from 6.6 per cent in Q2 FY24 .

CEA Calls for enhanced deregulation of MSMEs. “The faster economic growth that India needs is only possible if the union and state governments continue to implement reforms that allow small and medium enterprises to operate efficiently and compete cost-effectively”, says the Economic Survey 2024-25 tabled in Parliament today.

The Survey, tabled by Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman says that by reducing excessive regulatory burdens, governments can help businesses become more efficient, reduce costs, and unlock new growth opportunities. Regulations increase the cost of all operational decisions in firms, the Economic Survey adds.

Recognising that the government has implemented several policies and initiatives over the last decade to support and promote the growth of MSMEs, the Survey says some challenges in the regulatory environment remain. It says regulatory compliance burden holds back formalisation and labour productivity, limits employment growth, chokes innovation and depresses growth.

The Survey observes tendency for firms in India to remain small and the logic for it often is to remain under the regulatory radar and steer clear of the rules and labour and safety laws. It says that the biggest casualties of this are employment generation and labour welfare, which most regulations were originally designed to encourage and protect, respectively.

The CEA points out time has come when there is need to raise the game-

-Deregulation for growth

-Augmenting internal capacities for growth

-Role of public sector in nation building

-Energy transition- The Indian way

CEA Anantha Nageswaran says China within a span of 10 years, China occupies more than 70% of the manufacturing share in the solar value chain

CEA Anantha Nageswaran says Changing global landscape a key consideration. Globalisation a powerful force of change, altering global living standards, increasing connectivity and reducing costs.

Economic Survey says "India has made significant strides in promoting renewable energy and boosting domestic manufacturing of renewable energy equipment through initiatives such as the Production-Linked Incentive (PLI) Scheme.

The government’s vision of a ‘Viksit Bharat 2047’ embodies the concept of ‘Sabka Saath, Sabka Vikas’, as it lays emphasis on improving the quality of life, ensuring equitable and inclusive development in rural areas. It reflects a comprehensive ‘Welfare for All’ approach being achieved through a ‘Whole of Government’ strategy, highlights the Economic Survey 2024-25. Various measures have been taken in this regard by focusing on infrastructure, encompassing rural housing, drinking water, health and sanitation, clean fuel, social protection, and rural connectivity, along with enhancing rural livelihoods. The Survey highlights that taking digitization and technology to the rural economy has also been a key aspect of the rural development agenda, be it in agricultural activities or governance.

RBI’s Financial Stability Report (FSR), December 2024, the gross NPAs in the banking system have declined to a 12-year low of 2.6 per cent of gross loans and advances.

The rise in repatriation through the channels of secondary sales and Initial Public Offerings (IPOs) by multinational companies amid strong stock market performance points to investor confidence in profitable exits for direct investors.

According to economist and former Reserve Bank of India governor Dr C Rangarajan, “As of now, the potential rate of growth seems to be 6.5 per cent. This is reasonable in the light of the global uncertainties that exist today.” 

Retail inflation, as measured by the change in the Consumer Price Index (CPI), has softened to 4.9 per cent in April – December 2024 from 5.4 per cent in FY24.

Economic Survey states, the agriculture and services sectors emerged as key growth drivers during Q2 FY25. However, the overall growth was tempered by challenges in industrial growth, particularly in manufacturing, due to slowing global demand and supply chain disruptions

CEA sees the services sector continuing to show strength while manufacturing PMI indicated contraction.

Economic Survey outlines that the the real gross domestic product (GDP) growth for FY25 is estimated to be 6.4 per cent. Private final consumption expenditure at constant prices is estimated to grow by 7.3 per cent. It will be driven by a rebound in rural demand.

The agriculture sector is expected to rebound to a growth of 3.8 per cent in FY25. The industrial sector is estimated to grow by 6.2 per cent in FY25.

Economic Survey expects food inflation to soften in Q4

The Economic Survey sees trade outlook clouded going forward; India must cut down trade costs

Economic Survey indicates shows India's GDP grew by an impressive 8.2 per cent during the financial year 2023-24. India continues to be the fastest-growing major economy. The economy grew by 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.

Economic Survey indicates a weaker manufacturing sector and slower corporate investments are expected to drag India's growth to 6.4% in 2024-25. It will be slowest pace in four years and a sharp decline from the growth recorded in FY24.

Congress MP Karti Chidambaram took a dig at Prime Minister Narendra Modi over his ''videshi chingari' remark and stated that it's incumbent upon him to expose that foreign interference.

"It is surprising that the Prime Minister has said that there has been foreign interference in the last 10 years under his watch," Chidambaram told ANI.