The Economic Survey for the fiscal year 2024-25 was tabled in the Lok Sabha on January 31, 2025. The FM tabled the report on the lower house, following which the house was adjourned.
The Economic Survey
The central theme that appears to have emerged from the Economic Survey is De-Regulation. The report talks about the government stepping out of business for businesses to flourish.
This comes at a time when the larger economic system is looking for avenues to boost investment, which would only be possible in the dearth of bottlenecks and red tape.
Some of the other Key Highlights of the report are as follows.
The state of the economy, as per the Indian case in the context of the Global realm is essential.
According to the report, the global economy exhibited steady yet uneven growth across regions in 2024. A notable trend was the slowdown in global manufacturing, especially in Europe and parts of Asia (particularly China and Japan), due to supply chain disruptions and weak external demand.
Monetary Mantra
While underscoring the salience of monetary and financial bodies, the report lauded the RBI’s role in regulating monetary policies, including some of its decisions, including CRR reduction, and the most recent, OMO of Rs 60,000 crore to inject liquidity.
Further, the report added that the quality of assets in the banking system has improved. In addition, Against the backdrop of the recent monetary policy tightening cycle in India, bank deposits continue to exhibit double-digit growth.
However, their profile has gradually shifted towards schemes offering higher returns.
The report also highlighted the resilience of the Indian capital markets and underscored its role in wealth creation.
The report also stated that the sharp decline in core inflation was largely driven by core services inflation, which was lower than core goods inflation.
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Price Stability & Food Inflation
Another important factor that has garnered attention is the aspect of price stability. Which is fueled by Prices and Inflation. As the rate of inflation has increased in recent months, the survey has projected a softening of the inflation rate in last quarter or Q4. The report also anticipates the inflation rate would be in the RBI’s target of 4 per cent.
The report also stated that the sharp decline in core inflation was largely driven by core services inflation, which was lower than core goods inflation.
A decrease in fuel price inflation has also contributed to the moderation in headline inflation, alleviating pressure on household budgets.
Another major part of the edifice of inflation is food inflation.
The report claimed that food inflation and the rise in food prices are largely driven by a few items including vegetables and pulses. Vegetables and pulses together holds a total weightage of 8.42 per cent.
Price pressures, primarily in tomatoes and onions, were brought on by uneven monsoon-induced supply interruptions in some areas, which raised vegetable inflation rates and overall food inflation.
Trade And Economics
The report also spoke about international relationships and trade in light of changing factors. There was a particular emphasis on China. The report acknowledged the importance of China in the global business cycle and said that China’s prominent role in global supply chains continues to reshape the economic landscape.
Touching upon the aspect of climate change and energy transition, the report said that China, the United States, the EU, and other G7 economies produce more than 50 per cent of global greenhouse gas emissions.
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Touching upon the aspect of climate change and energy transition, the report said that China, the United States, the EU, and other G7 economies produce more than 50 per cent of global greenhouse gas emissions.
All these players have target dates to reach net-zero emissions.
This has led to a different kind of race to attain supremacy in the field.
The struggle to create viable solutions for problems of renewable energy would result in trade conflicts between major economies.
This conflict according to the report will pose significant risks to the green energy transition, imposing huge costs on the global economy.
India’s Capital Expenditure
Focusing on the spending part of the nation, India’s CAPEX, according to the report picked up after the elections and after moral code of conduct was lifted.
The capital expenditure saw an uptick in July-November 2024
Capex in infrastructure sectors is expected to gain further momentum in the remaining months of the current fiscal. On average, ministries related to infrastructure sectors utilised 60 per cent of the budgeted capex during April to November 2024.
The Union government’s capex rose by 8.2 per cent in July – November 2024. Furthermore, when it comes to state governments, 11 states witnessed an increase in CAPEX.
Credit and FDI
According to the report, the total outstanding bank credit to the services sector stands at 48.5 lakh crore as of November 2024. FDI equity inflows stood at USD 29.8 billion in FY25 (April- September).
In addition, the insurance services received the highest FDI inflows of over 62 per cent, followed by the financial sector, which received over 18 per cent of the total FDI equity inflows to the services sector.
Artificial Intelligence | DALL·E-generated
Artificial Intelligence
The report also spoke about the buzzword of the world, Artificial Intelligence or simply AI. The report highlighted the myriad avenues of the economy that have managed to accommodate AI into their systems, including the banking sector. The report also signed caution for what AI could hold.
The report stated that AI has the potential to deliver clearly measurable benefits in terms of productivity, but the costs, especially in terms of investment required are high. The report called AI experimental in nature and said that its real world utility remain unclear.
