India’s Economic Survey: Growth Projected at 6.3-6.8% Amid Stable Inflation

India’s Economic Survey: Growth Projected at 6.3-6.8% Amid Stable Inflation

The Indian economy is expected to grow at a rate of 6.3% to 6.8% in FY26, as per the Economic Survey 2024-25, tabled in Parliament by Finance Minister Nirmala Sitharaman. The economic survey, released just ahead of the Union Budget 2025-26, highlights robust economic fundamentals, declining unemployment, and stable inflation, while also pointing to the need for structural reforms to sustain long-term growth.

Economic Growth Trends and Stability

According to the Economic Survey, India’s GDP growth rate for the next fiscal year is projected within a 6.3-6.8% range, reflecting a strong external account, controlled fiscal consolidation, and steady private consumption. However, this forecast marks the slowest growth since FY21, when the pandemic-induced contraction led to a negative growth rate of -5.8%.

Comparatively, India’s GDP has seen fluctuating trends in recent years:

• FY22: 9.7%
• FY23: 7.0%
• FY24: 8.2%

Despite the slight slowdown, the survey underscores India’s resilient economic framework, emphasizing policy prudence, sectoral reforms, and an expanding domestic market as crucial elements to sustain long-term momentum.

Inflation Under Control, Food Prices to Ease

The Economic Survey projects inflation to remain stable, with food prices expected to soften in the final quarter of FY25. The seasonal arrival of Kharif crops and a decline in vegetable prices are expected to ease inflationary pressures, providing relief to consumers.

However, geopolitical uncertainties and global trade risks remain key concerns, posing potential challenges to price stability. The survey stresses the importance of careful monetary policy interventions to maintain inflation within the acceptable range.

Headwinds to Growth

While India’s economic outlook remains positive, the survey outlines several risks that could impact growth:

• Global Trade Uncertainties: Rising geopolitical tensions and shifting trade alliances could affect India’s external sector.
• Commodity Price Volatility: Fluctuations in global energy and commodity prices could pose inflationary risks.
• AI Governance and Regulation: The absence of a structured regulatory framework for artificial intelligence may lead to potential misuse of the technology.
• Stock Market Corrections: Increased retail investor participation could result in higher volatility if markets experience sharp corrections in 2025.

The report highlights that India must improve global competitiveness by undertaking structural reforms at the grassroots level, enhancing deregulation, and ensuring ease of doing business.

Strategic Policy Interventions Needed

The survey emphasizes that prudent policymaking and targeted interventions are essential for navigating global headwinds. Some key policy priorities outlined include:

• Boosting Corporate Bond Market Liquidity: Addressing entry barriers, reducing information asymmetry, and developing a secondary market.
• Strengthening Insolvency Laws: The deterrent impact of India’s insolvency framework has already resulted in faster debt resolution, but further refinements are needed.
• Rupee Volatility and Exchange Rate Stability: The 2024 rupee depreciation was largely due to a strong US dollar amid geopolitical uncertainties and the US election cycle. Managing external risks will be critical in 2025.

Union Budget 2025-26: What to Expect

The Economic Survey sets the stage for the Union Budget 2025-26, which will be presented by Finance Minister Nirmala Sitharaman on Saturday. With economic stability in focus, the government is expected to announce key fiscal measures, address structural reforms, and outline strategies to sustain long-term economic expansion.

As India continues its growth trajectory, the balancing act between policy prudence and economic reforms will define its ability to navigate global uncertainties while maintaining domestic resilience.