Economic Survey 2024-2025: Key Insights

External Sector Resilience

• Forex Reserves and FPI Inflows: The Indian economy shows resilience with healthy forex reserves and net positive FPI inflows, despite recent large outflows.
• Trade Challenges: Geopolitical conflicts, particularly in the Red Sea, pose significant challenges to global and Indian trade.
• Export Growth Challenges:
  • Non-tariff measures,  Carbon Border Adjustment Mechanism (CBAM), and  European Union Deforestation Regulation (EUDR) are impacting export growth.
  • Emphasis on diversifying exports and increasing efficiencies to lower costs.
• Balance of Payments: Strong services exports and remittances support the balance of payments, despite reduced net FDI.
• Current Account Deficit: There's a risk of an increasing deficit; hence, making FDI more attractive is crucial.

Inflation Analysis

• Price Volatility: Extreme weather events are causing volatility in food prices like onions, tomatoes, and pulses.
• Core Inflation: Core inflation has decreased, and commodity prices are expected to fall, aiding in meeting RBI's inflation targets.
• Monetary Policy Suggestions:
  • High-yield and drought-resistant farming.
  • Price monitoring and supply-side interventions.

Growth Aspirations

• GDP Growth Target: To achieve Viksit Bharat by 2047, GDP must grow at 8% annually in real terms.
• Investment and Job Creation:
  • Increase investment rate from 31% to 35%.
  • Create over 7 million non-farm jobs.
• Infrastructure and Skill Development: Develop world-class infrastructure and improve education quality for workforce empowerment.
• MSME Growth: Reduce regulatory burdens to enable MSMEs to grow.

Policy Recommendations

• Regulatory Approach: Encourage states to adopt 'minimum necessary, maximum feasible' regulation.
• Fiscal Policy: Continue fiscal prudence with higher allocations to infrastructure, health, education, technology, and agriculture.
• Climate Change Adaptation: Focus on diversification and efficiency in agriculture, and adaptation measures for climate change.
• Monetary Policy: Encourage a different approach to inflation, especially concerning food inflation.