India’s economy is projected to grow between 6.3% and 6.8% in the fiscal year 2025-26 (FY26), according to the Economic Survey 2024-25 presented by Finance Minister Nirmala Sitharaman. This projection, released ahead of the Union Budget, is based on strong domestic fundamentals, a declining unemployment rate, and stable inflation.
The survey highlights a robust domestic economy with a strong external account and stable private consumption. However, it also notes that navigating global headwinds will require strategic policy management and further reforms to maintain growth momentum. This projected growth rate would be the lowest since the Covid-affected year 2020-21, when India experienced a negative growth of 5.8%. Growth rates were 9.7% in 2021-22, 7% in 2022-23, and 8.2% in the previous fiscal year.
The Union Budget 2025-26 will be presented by Ms. Sitharaman on Saturday.
Key Highlights from the Economic Survey:
- Robust Indian economic fundamentals, including a strong external account and stable private consumption.
- Anticipation of softening food inflation in Q4 FY25 due to seasonal factors and Kharif harvest.
- Balanced economic prospects for FY26, but with headwinds from geopolitical and trade uncertainties.
- Need for strategic policy management to navigate global headwinds and reinforce domestic fundamentals.
- Recommendation for improving global competitiveness through grassroots-level structural reforms and deregulation.
- Limited inflation risk from higher commodity prices in FY26, although geopolitical tensions remain a concern.
- Concerns about potential misuse of AI due to a lack of a suitable governance framework.
- The insolvency law’s deterrent effect has facilitated early resolution of distress for thousands of debtors.
- Need to address entry costs, information asymmetry, and the absence of a secondary market to enhance liquidity in the corporate bond market.
- 2024 rupee depreciation attributed to a strong US dollar and geopolitical uncertainties.
- Potential cascading effect on India from a significant market correction in 2025, especially considering increased participation from retail investors.
“`
