Economic Survey 2025: From 6.3% GDP, Reduced Inflation, Focus On China To AI Threat

New Delhi: Amid global uncertainty, Union Finance Minister Nirmala Sitharaman tabled the Economic Survey document in Lok Sabha in Parliament on Friday (January 31) with the GDP for FY26 being projected between 6.3-6.8%.

The survey expects inflation to remain under control. It also estimates the consumption to remain stable, hoping for the rural demand to gain traction.

Here are key takeaways:
• All’s well in most sectors: The survey document shows all sectors are performing well. “The agriculture sector remains strong, consistently operating well above trend levels. The industrial sector has also found its footing above the pre-pandemic trajectory. The robust growth rate in recent years has brought the services sector to its trend levels,” the survey states.

• Inflation: The survey pointed out that retail headline inflation reduced from 5.4 per cent in FY24 to 4.9 per cent in April –December 2024 due to various government initiatives and monetary policy measures. It noted that supply chain disruptions, extreme weather conditions, and consequent reduced harvests led to India’s food inflation. “Despite challenges, there are positive signs for inflation management in India. The Reserve Bank of India and the International Monetary Fund (IMF) project that India’s consumer price inflation will gradually align with the target of around 4 per cent in FY26,” it said.

• Decline in non-performing assets of banks: The survey highlights a consistent decline in the gross non-performing assets (GNPA) ratio of commercial banks.

• 17.9% hike in foreign direct investment: India’s gross foreign direct investment inflows revived in FY25. It increased from $47.2 billion in the first eight months of FY24 to $55.6 billion in the same period of FY25, a YoY growth of 17.9%.

• Focus on new global realities: The survey highlights the significance of deregulation in achieving the goal of “Viksit Bharat,” and emphasizes on assessment of India’s medium-term growth outlook in the context of new global realities, such as geo-economic fragmentation (GEF) and China’s manufacturing prowess and strategic dominance. “The way forward for India is to reinvigorate the internal engines and domestic growth levers and focus on economic freedom. The focus of reforms and economic policy must now be on systematic deregulation as the key agenda under Ease of Doing Business 2.0,” it states.

• Need infra investment boost: It highlights that India’s growth plans for the next decade require a large investment in infrastructure.

• Steel industry: According to the survey report, India’s steel sector witnessed a 4.6% growth in the April to November months of FY2024-25, fueled by public spending in key infrastructure industries.

• Service sector: “The service sector’s contribution to total GVA has risen from 50.6 per cent in FY14 to 55.3 per cent in FY25 (First Advance Estimates),” said the survey.

• Industrial sector grew by 6.2%: According to the survey, the industrial sector grew 6.2% in the financial year ended 2025, according to the first advance estimates of GDP, driven by robust growth in electricity and construction. “The industrial sector has also found its footing above the pre-pandemic trajectory. The robust rate of growth in recent years has taken the services sector close to its trend levels,” said the survey.

• AI threat to lower and middle income groups: “The advancement of AI comes with consequences, particularly for middle- and lower-income workers, with large-scale labor displacement expected as AI surpasses human decision-making across various fields,” it said.

• Railway report: The Economic Survey 2024-25 highlighted that railway network expansion in FY25 has remained on pace with the previous year, while the addition of rolling stock has seen a notable rise. According to the report, 2,031 km of railway network was commissioned between April and November 2024, compared to 2,282 km in the same period of FY24, marking a reduction of 251 km. However, the addition of rolling stock, including wagons, coaches, and locomotives, has grown significantly. Wagon production increased from 22,042 units in FY24 (April-November) to 26,146 units in FY25. Similarly, the production of locomotives rose from 968 units to 1,042 units over the same period.