Economic Survey 2025: A Cautious Outlook for India’s GDP Amid Global Market Risks

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The Economic Survey 2025, tabled by Finance Minister Nirmala Sitharaman on January 31, 2025, presents a cautious outlook for India’s GDP amid a backdrop of global market risks.

The survey forecasts India’s GDP growth to be between 6.3% and 6.8% for the financial year 2025-26, while estimating a 4-year low growth rate of 6.4% for the current fiscal year (FY25) due to weak manufacturing and investment trends.

Key Insights from the Economic Survey

Economic Growth Projections

The survey indicates that while the fundamentals of the domestic economy remain robust—characterized by a strong external account and stable private consumption—certain sectors are facing challenges.

The projected growth rate for FY26 is notably lower than previous estimates, reflecting the impact of subdued demand and global economic uncertainties. This cautious forecast comes as a response to ongoing pressures in the manufacturing sector and overall investment climate.

Sectoral Performance

• Agriculture and Services: The first half of FY25 saw growth supported primarily by agriculture and services, buoyed by favorable conditions in the Kharif crop season. Rural demand has improved, contributing positively to economic stability.
• Manufacturing Sector: Conversely, the manufacturing sector has struggled due to weak global demand, highlighting vulnerabilities in India’s industrial landscape. The survey emphasizes the need for policy reforms to enhance competitiveness and attract private investments.

Global Market Risks

The Economic Survey underscores the significance of external factors influencing India’s economy. It warns of increasing geopolitical tensions and trade uncertainties that could hinder growth prospects.

The report notes that China’s dominance in global manufacturing poses a challenge for India, particularly in sectors reliant on raw materials such as pharmaceuticals and electronics.

Recommendations for Sustained Growth

To navigate these challenges, the survey advocates for:

• Policy Reforms: Emphasizing deregulation and improving the ease of doing business to foster a conducive environment for investment.
• Strengthening Agriculture: Recognizing agriculture as a critical sector, the report suggests enhancing productivity and ensuring food security.
• Encouraging Private Investment: It calls for measures to boost private sector engagement while cautioning firms against low salary offerings that could dampen consumer spending.

Conclusion

The Economic Survey 2025 presents a nuanced view of India’s economic landscape, balancing optimism with caution.

As India positions itself amid global uncertainties, strategic reforms and sectoral support will be essential to achieving sustainable growth.

The government’s proactive measures will play a crucial role in mitigating risks and harnessing opportunities in the evolving economic environment.

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