Budget 2025 Expectations Highlights: Economic Survey 2024-25 highlights government’s push for rural development

The Economic Survey presented on Friday called for addressing the challenges faced by textile exporters, particularly the complex procedures that hinder the sector’s growth. Unlike its competitor countries like China and Vietnam, India’s textile exporters are burdened with complicated processes.

The survey pointed out that textile exporters in India must meticulously account for every square centimetre of fabric, as well as for components like buttons and zippers, making the exporting process more cumbersome.

It recommended simplifying, consolidating, and eliminating these processes, which consume significant financial and managerial resources, describing such actions as "low-hanging fruit" that could greatly benefit exporters.

The survey emphasized that addressing these challenges could reduce costs, ease the burden on exporters, and enhance their competitiveness. "This is the time to be deft about our warp and weft!" it stated, stressing the need for efficiency and better management in the textile sector.

Moreover, the survey highlighted that costs for the textile industry are expected to rise in the coming years, driven by a global shift toward sustainable sourcing. Regulatory changes often drive such shifts. For example, the European Union (EU) has introduced 16 pieces of legislation spanning the entire fashion value chain, which came into force between 2021 and 2024.

Given that the EU accounts for nearly 20 percent of India's textile exports, these regulatory changes present challenges, particularly for small enterprises that will need to transition to environmentally sustainable production methods to stay competitive.

The Economic Survey on Friday highlighted the challenges faced by textile exporters in India, particularly the complex procedures that hinder the sector's growth. Unlike competitors such as China and Vietnam, Indian textile exporters are burdened by intricate processes, the survey noted.

It pointed out that textile exporters in India are required to meticulously account for every square centimetre of fabric, along with additional components like buttons and zippers, making the process more cumbersome.

The survey emphasized that simplifying, consolidating, and eliminating such processes— which consume significant financial and managerial resources—could greatly benefit exporters. It called this a "low-hanging fruit" for promoting the sector's growth.

The survey also stated that addressing these challenges could significantly reduce costs, ease the burden on exporters, and enhance their efficiency and competitiveness. "This is the time to be deft about our warp and weft!" it noted.

Additionally, the survey acknowledged that the textile industry's costs are expected to rise in the coming years, driven by a global shift towards sustainable sourcing. Regulatory changes are often a catalyst for such shifts; for instance, the European Union has implemented 16 pieces of legislation covering the entire fashion value chain between 2021 and 2024.

Given that the EU accounts for nearly 20 percent of India's textile exports, these changes pose significant challenges, particularly for small enterprises that need to adapt to environmentally sustainable production methods.

The Economic Survey 2024-25 tabled in parliament on Friday credits Tamil Nadu’s industrial promotion. Discussing the link between state-level business reforms and industrial development, the document laid out the case study of Tamil Nadu’s diversification to the non-leather sector.

“Tamil Nadu is a leader in the traditional leather sector and is now championing the growth of non-leather footwear. The state contributes to 38% share in India’s footwear and leather products output, contributing to about 47% share in India’s total leather export. This sector generates more than two lakh employment,” it stated. It further noted initiatives like developing industrial estates, efforts to attract foreign investors.

“Guidance (state investment promotion agency) actively liaised with Taiwanese agencies to strengthen ties with potential investors in the footwear sector. It established contacts with major contract manufacturers of Nike like Pou Chen, Hong Fu, Taekwang and ChangShin, positioning Tamil Nadu as an attractive destination for manufacturing,” the survey noted.

It mentions the state govt’s customised incentives packages, bringing out publicity material in foreign languages like Mandarin, Japanese and appointing dedicated investment facilitator for each investor, single window for clearances. “This has enhanced the reputation of TN as an investment friendly state,” the report noted.

The Economic Survey highlights the transformative impact of the Narendra Modi government on India's marine sector, ports, shipping, and waterways minister Sarbananda Sonowal said on Friday. Finance minister Nirmala Sitharaman presented the Economic Survey for 2024-25 in the Lok Sabha that day.

Sonowal expressed satisfaction, stating, "I am gratified to see the ministry of ports, shipping & waterways leading the way among infrastructure ministries, with a remarkable 76 percent capital expenditure up to November 2024 for FY25 (BE), as per the Economic Survey 2024-25."

He also noted the exceptional capacity enhancement in ports, which grew from 3 million tonnes per annum (MTPA) during April-November FY24 to 21 MTPA in the same period this fiscal year.

Citing further improvements, Sonowal highlighted a significant reduction in the average container turnaround time at major ports, which dropped from 48.1 hours in FY24 to 30.4 hours in FY25 (April-November), according to the Economic Survey.

The Himachal Pradesh government and various sections of society are eagerly anticipating the Union Budget for 2025-26, which will be presented by Union Finance Minister Nirmala Sitharaman on Saturday. Chief mnister Sukhvinder Singh Sukhu voiced the state's demand for the full funding of an international-standard airport, highlighting that Himachal does not currently have such an airport and calling for the Union government to bear the entire cost of its construction.

Additionally, Sukhu urged that the Centre should fully fund the construction of the Bhanupalli-Beri and Chandigarh-Baddi railway lines, as the state government is currently shouldering fifty percent of the project cost, including land acquisition expenses.

In the rural areas, shepherds and weavers from Baijnath in Kangra are hoping for a higher budget allocation aimed at creating employment opportunities for rural communities. They are also advocating for financial support for rural cooperative societies.

Handloom weavers from Mandi have requested that Industrial Training Institutes (ITIs) include training programs to help enhance the skills of weavers, while the tourism industry in Kullu and Manali is seeking the expansion of both the railway network and airports to boost connectivity and tourism.

Budhi Prakash, a tourism activity coordinator in the state, emphasized that people are also hoping for budgetary support for winter sports, in addition to improvements in rail and air transport infrastructure.

As discussions on extreme work hours continue in corporate India, the pre-Budget Economic Survey has issued a strong caution against excessive workloads, citing studies that link long working hours to severe health consequences.

The survey, released on Friday, noted that working over 60 hours a week can be detrimental to mental well-being and productivity. Drawing from research by the WHO and ILO, it highlighted that individuals spending 12 or more hours a day at a desk report significantly higher stress levels, with mental well-being scores dropping by approximately 100 points compared to those who work two hours or less at a desk. "While the hours spent at work are informally considered a measure of productivity, studies have documented adverse health effects when hours exceed 55-60 per week," the survey stated, citing research by Pega F and Nafradi B (2021).

A revision in income tax rates or slabs to alleviate the burden on the middle class, which is grappling with high prices and stagnant wages, is widely anticipated in Finance Minister Nirmala Sitharaman's record eighth consecutive Budget. The Budget, which will outline the fiscal plan for the year starting April 1, is expected to include measures aimed at addressing weakening economic growth while maintaining fiscal discipline. It is likely to focus on boosting consumption, while adhering to the fiscal deficit reduction roadmap.

Expectations of income tax relief, particularly for the lower middle class, are heightened following Prime Minister Narendra Modi's recent statement invoking Goddess Lakshmi to bless the poor and middle class. "I pray to Goddess Lakshmi that the poor and middle-class sections in the country are blessed by her," Modi said on Friday before the start of the Budget session outside Parliament.

This Budget, set to be the government’s first full-year budget in its third term, is presented against the backdrop of geopolitical uncertainties and an economic growth rate slowing to a four-year low. Additionally, the pressure of possible tariffs from newly elected US President Donald Trump on countries like India adds to the complexity.

Analysts and experts are anticipating some tax rationalization, a push for exports, improved capital spending execution, and a clear roadmap for structural reforms. They also expect the expansion of production-linked incentives and increased funding for certain welfare schemes, while continuing to focus on infrastructure development and upgrades.

Finance Minister Nirmala Sitharaman on Friday finalized preparations for the Modi government’s first full Budget in its third term, set to be presented on February 1. The Budget is expected to strike a balance between middle-class tax relief and the need to sustain economic growth while maintaining fiscal discipline.

The Finance Ministry, in a post on X, confirmed that Sitharaman held discussions with secretaries and senior officials involved in the Budget-making process at her North Block office. Minister of State for Finance Pankaj Chaudhary also participated in the meeting.

Economic Growth Concerns
The Budget comes at a time when India's GDP growth is projected to slow to 6.4% in FY25, its weakest pace since the pandemic. The Economic Survey 2024-25 estimates growth in the range of 6.3-6.8% for FY26, lower than the near 8% annual rate required to meet the ‘Viksit Bharat 2047’ goal. The survey emphasized the need for deregulation and reforms in land and labor to sustain long-term expansion.

Balancing Priorities
With high inflation and stagnant wage growth weighing on the middle class, expectations are high for tax relief. However, with fiscal constraints in mind, the government will need to balance these measures with spending on infrastructure and economic stimulus.

Sitharaman’s eighth consecutive Budget—a record for any finance minister—will set the tone for economic policy in Modi 3.0, shaping India’s path toward its long-term growth ambitions.

The Indian Space Research Organisation (ISRO) is leveraging advanced geospatial platforms to support various sectors, from monitoring electrical infrastructure to aiding urban planning, according to the Economic Survey tabled in Parliament on Friday.

ISRO’s Bhuvan platform is playing a crucial role in tracking projects under rural development schemes like MGNREGA and PM Krishi Sinchayee Yojana. The survey highlighted its application in Maharashtra and Telangana, where it supports electrical infrastructure management through Web-GIS portals. Additionally, judicial infrastructure has benefited from space-based solutions, with the NyayaVikas Portal monitoring 2,840 judicial projects using Web GIS and mobile geotagging.

For urban planning, ISRO has developed large-scale 2D geospatial databases for 238 AMRUT cities, aiding the creation of GIS-based master plans.

The report underscored the importance of coordinated efforts between the Centre, states, Union Territories, Higher Education Institutions (HEIs), and regulatory bodies for the effective implementation of the National Education Policy (NEP) 2020.

It also pointed out that the current regulatory framework, managed by the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE), consists of over 50 regulations, which do not fully align with NEP’s vision of a “light but tight” regulatory model. The survey suggested granting more autonomy to institutions in structuring courses and credits to streamline the education system.

The survey noted a persistent digital divide, particularly affecting rural students, especially females. Data from the Comprehensive Annual Modular Survey 2022-23 revealed that 63% of males and 55% of females in rural areas can search the internet for information, compared to 74% of males and 69% of females in urban areas. The findings highlight the need for targeted efforts to bridge this gap.

India's higher education system ranks among the largest globally, with 4.33 crore students enrolled in 2021-22—an increase of 26.5% from 3.42 crore in 2014-15. The Gross Enrolment Ratio (GER) for the 18–23 age group has also risen from 23.7% in 2014-15 to 28.4% in 2021-22. The survey stressed the need to double the educational network and infrastructure to achieve the government's target of a 50% GER by 2035.

India’s school education system serves 24.8 crore students across 14.72 lakh schools, supported by 98 lakh teachers. Government schools make up 69% of total institutions, enrolling half of all students and employing 51% of teachers. Private schools account for 22.5% of institutions, educating 32.6% of students and employing 38% of teachers.

The survey emphasized the growing significance of skill-based education in the wake of Industry 4.0. Advancements in automation, artificial intelligence (AI), the Internet of Things (IoT), big data, and robotics have increased the demand for a technically skilled workforce. Additionally, soft skills such as adaptability, problem-solving, and collaboration are now critical for students entering the job market.

The Economic Survey 2024-25, tabled in Parliament on Friday, highlighted a steady decline in school dropout rates but pointed to challenges in student retention across different education levels. According to the report, dropout rates now stand at 1.9% for primary, 5.2% for upper primary, and 14.1% for secondary levels.

However, retention rates remain a concern, with 85.4% of students staying through primary education (Class 1-5), 78% through elementary (Class 1-8), 63.8% through secondary (Class 1-10), and only 45.6% through higher secondary (Class 1-12).

The survey also compared the situation to China’s 996 culture—a work schedule of 9 am to 9 pm, six days a week—which has garnered international criticism due to its negative impact on workers' health.

In the Indian context, the survey emphasized that achieving the country's economic goals requires a balanced focus on lifestyle choices, mental health, and workplace culture. It cautioned that pushing employees into excessively long hours could ultimately hinder, rather than promote, economic growth.

The Economic Survey's findings come amid a growing debate on long work hours, especially following controversial statements by corporate leaders. Last year, Larsen & Toubro’s Chairman S N Subrahmanyan supported a 90-hour workweek, while Infosys co-founder Narayana Murthy advocated for a 70-hour workweek. Adani Group Chairman Gautam Adani also contributed to the debate by claiming that spending more than eight hours at home could strain personal relationships.

However, several industry leaders have countered these views. RPG Group’s Harsh Goenka argued that excessive work hours lead to burnout, not success. Mahindra Group’s Anand Mahindra emphasized that productivity should be the focus, rather than the number of hours worked. ITC Ltd Chairman Sanjiv Puri also stressed the importance of empowering employees over merely extending work hours.

The survey further identified toxic work environments, poor managerial relationships, and a lack of purpose at work as significant contributors to absenteeism. Even in organizations with positive cultures, employees lose up to five days a month due to stress-related issues. Globally, mental health conditions such as anxiety and depression cause a loss of 12 billion workdays annually, resulting in economic losses of about $1 trillion—equivalent to Rs 7,000 per lost day in India.

As discussions on extreme work hours continue to stir debates in corporate India, the pre-Budget Economic Survey has issued a stern warning against overwork, citing studies that link long working hours to serious health consequences.

Released on Friday, the survey highlighted that working more than 60 hours a week can severely harm mental well-being and productivity. Drawing on research from the World Health Organization (WHO) and the International Labour Organization (ILO), it pointed out that individuals who spend 12 or more hours a day at their desks experience higher stress levels, with their mental well-being scores dropping by around 100 points compared to those working fewer hours.

"While the hours spent at work are informally considered a measure of productivity, studies have documented adverse health effects when hours exceed 55-60 per week," the survey noted, citing research by Pega F and Nafradi B (2021).

91 Gati Shakti cargo terminals were commissioned, alongside significant growth in solar and wind energy installations.

The Mumbai-Ahmedabad High-Speed Rail Project saw 47.17% progress, while the Dedicated Freight Corridors (DFCs) reached 96.4% completion.

1,337 stations identified for redevelopment, alongside 50 PMBJKs and improvements in catering, signalling, and Wi-Fi infrastructure at stations.

79,380 local artisans benefited from sales opportunities under the One Station One Product Scheme at 1,900 stations.

Upgrades to electrical/electronic interlocking systems and the Kavach Automated Train Protection System demonstrate progress in railway safety.

The Economic Survey 2024-25 notes a reduction in rail network expansion, with 2,031 km commissioned between April-November 2024, compared to 2,282 km in the same period last year.

Production of wagons and locomotives saw significant growth, with wagons increasing from 22,042 to 26,148 and locomotives rising from 968 to 1,042.

17 new Vande Bharat trains were introduced, raising the total to 68. However, production of Vande Bharat coaches declined from 456 in FY 2023-24 to 228 in FY 2024-25.

Economic Survey 2024-2025: Is the Indian stock market headed for a meaningful correction in 2025? The Economic Survey 2025 tabled in Parliament ahead of Budget 2025 has pointed to risks for the Indian stock market in 2025, especially in light of possible corrections in the US stock market.

The Economic Survey has flagged risks saying, “Elevated valuations and optimistic market sentiments in the US raise the likelihood of a meaningful market correction in 2025. Should such a correction occur, it could have a cascading effect on India, especially given the increased participation of young, relatively new retail investors.”

The Economic Survey released on Friday emphasized that the localisation of Sustainable Development Goals (SDGs) ensures rural development aligns with international objectives. It praised Kerala for its robust, community-based model, leveraging strong local governance institutions, and described it as a "replicable model" for SDG localisation.

The survey explained that by focusing on essential services such as housing, sanitation, water supply, and electrification, SDG localisation promotes inclusive growth and improves quality of life at the grassroots level. Kerala’s model, built on community engagement and local governance, is cited as a key example of how SDGs can be integrated effectively at the regional level.

The state's Local Self Government Department, in collaboration with the Kerala Institute for Local Administration (KILA), has developed comprehensive guidelines for incorporating SDGs into local planning. These efforts also include training local stakeholders in SDG-aligned development and data collection.

Kerala's real-time SDG dashboard, which tracks panchayat-level progress, allows the state to make informed decisions based on localised data and development indicators.

The survey also highlighted the role of SDG Coordination Centres (SDGCCs), which are operational in 10 states and union territories, including Andhra Pradesh, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Nagaland, Punjab, Tamil Nadu, Uttar Pradesh, and Uttarakhand. These centres drive SDG localisation through partnerships with governments and implementing agencies.

At the grassroots level, SDG localisation is being driven by Village Panchayat Development Plans under Mission Antyodaya and the Transformation of Aspirational Districts Programme (TADP), initiated in 2018. The preparation for a Local Indicator Framework (LIF) at the Gram Panchayat level is underway, with nine themes developed across the 17 SDGs.

Stock market today: The BSE Sensex surged 741 points whilst Nifty closed above 23,500 on Friday, driven by substantial buying in Larsen & Toubro following its Q3 results and the Economic Survey's forecast of a growth-oriented budget. The BSE Sensex rose 740.76 points (0.97%) to 77,500.57, reaching an intraday peak of 77,605.96. The NSE Nifty advanced 258.90 points (1.11%) to 23,508.40, touching 23,546.80 during trading.

The government has prioritized improving the quality of life in rural areas to ensure equitable and inclusive development, according to the Economic Survey 2024-25 tabled in Parliament on Friday. The report, presented by Finance Minister Nirmala Sitharaman, outlines key initiatives in infrastructure, rural housing, sanitation, clean fuel, social protection, and connectivity, along with efforts to boost rural livelihoods.

The survey highlights financial inclusion as a critical focus, with rural households and small businesses accessing credit through microfinance institutions, self-help groups (SHGs), and other intermediaries. It also underscores the role of digitization in rural development, citing the SVAMITVA scheme’s impact on land records management and economic empowerment.

Healthcare remains a priority, especially in the wake of the COVID-19 pandemic. On infrastructure, the survey reports that under the Pradhan Mantri Gram Sadak Yojana (PMGSY), 8,34,695 km of roads were sanctioned by January 9, with 7,70,983 km completed, providing connectivity to 99.6% of targeted habitations.

Since 2016, 2.69 crore houses have been built under the Pradhan Mantri Awas Yojana-Gramin (PMAY-G), and 68,843 water bodies constructed under Mission Amrit Sarovar. As of January 27, around 12.2 crore households have received tap-water connections under the Jal Jeevan Mission, while 11.8 crore toilets and 2.51 lakh community sanitary complexes have been set up under the Swachh Bharat Mission (Gramin).

For the Particularly Vulnerable Tribal Groups (PVTG), the Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM-JANMAN) has introduced a separate vertical under PMGSY, easing population norms to provide connectivity to unconnected habitations. The initiative aims to construct 8,000 km of roads by March 2028, with 1,557 projects covering 4,781.44 km sanctioned as of January 9.

“As we look ahead to the Union Budget 2025, it is essential that we move beyond incremental measures and take transformative steps to bridge the widening gap between education, skilling, and employability. While last year’s focus on employment-linked skilling schemes and financial support for education loans was encouraging, the true challenge lies in driving systemic change that integrates skilling into the DNA of higher education. We urge the government to strengthen the Model Skilling Loan Scheme, ensuring it includes targeted funding for industry-aligned, short-term certifications that enhance employability in dynamic sectors like marketing, technology, and digital innovation.

Additionally, the salary eligibility cap for employment incentives should be revised upwards to reflect the rising aspirations and realities of India’s knowledge economy. Educational institutions must be incentivized—and held accountable—to embed experiential learning, internships, and mentorships as a core part of their programmes. The burden of making students workforce-ready cannot rest solely on companies. At the same time, investments in AI hubs, EdTech regulatory frameworks, and a nationwide push toward digital-first classrooms are non-negotiable if we want to future-proof our workforce. We hope this budget delivers not just on numbers but also on systems and accountability. India’s youth need more than degrees; they need a cohesive ecosystem that empowers them to become industry leaders from day one,” says Varun Satia, Founder & CEO, Kraftshala.

"The Economic Survey projects a GDP growth of 6.3%-6.8% for FY25, which presents a realistic outlook amidst global and domestic headwinds. Larger corporates remain uncertain about taking on additional investments, and political decisions—especially in the US—will influence capital flows. The intensification of global conflicts, such as the Russia-Ukraine and Israel wars, adds further uncertainty. However, a pick-up in consumption expenditure and investment could help drive growth. The government's focus on deregulation is a positive step in creating an investor-friendly environment, which may provide much-needed support,” says Rishi Shah, Partner and Economic Advisory Services Leader, Grant Thornton Bharat.

“The Economic Survey summarises the challenges facing the Indian economy, with more headwinds than tailwinds listed. It may be challenging to achieve the projected growth rate of 6.3–6.8%, given that growth in the fast lane is predicated on difficult deregulation and reforms at grass-roots level. The survey hints at continued fiscal consolidation in the upcoming budget and at nudging the Monetary Policy Committee for policy support towards the growth engine in FY26,” says Ranen Banerjee, Partner and Leader Economic Advisory, PwC India.

“India’s agricultural sector has demonstrated remarkable resilience in recent years, marked by consistent growth rates. This stability can be largely attributed to various government initiatives to enhance productivity, promote crop diversification, and increase farmers' income. A crucial factor influencing agricultural performance is the impact of weather conditions. Climate variability can present significant challenges; however, farmers with diverse income streams are better positioned to navigate these uncertainties. Allied activities such as animal husbandry, fisheries or agroforestry, can enable the farmers to mitigate the risks effectively. Various government initiatives are specifically designed to address these challenges,” says Economic Survey 2025.

“Domestically, the embedded service content of the non-service economic activities has increased significantly, as evidenced by the National Accounts Statistics. There is also growing literature emphasising the ‘servicification’ of manufacturing, i.e., increasing utilization of services in manufacturing production and post-production value addition. This means that growth in manufacturing has a significant bearing on service sector growth, and vice versa. At the same time, the increasing penetration of digital technologies and artificial intelligence in manufacturing and service sector activities like finance, retail and commerce, telecom, and, transport and logistics is changing the very composition of demand for embedded services.

This picture of the emerging services landscape auto-generates two conclusions. First, it is widely believed that the manpower (and sectors) with suitable digital and technical skills stand to benefit from AI penetration. Hence, one of the primary conditions for manufacturing and service sector progress is the focus on appropriate skilling of the labour force. The significant initiatives taken in the Budget 2024-25 need to be carried forward into action by the synergic efforts of all tiers of the government, private sector and skilling institutions. Second, there is an urgent need to review and amend complicated procedures at the grassroot level, regulations and rules that hinder both manufacturing and services,” says Economic Survey 2025.

“The Open Network for Digital Commerce (ONDC) represents a paradigm shift, promoting a democratic and interoperable digital commerce ecosystem thus fostering inclusivity and equity. ONDC enables buyers and sellers to transact seamlessly across different platforms. It helps by reducing customer acquisition costs, enhancing business efficiencies, and expanding choices for merchants and consumers.

ONDC recorded more than 14 million transactions in the month of November 2024 across 1100+ cities. 7 lakh+ sellers and service providers are active on the ONDC network spread across 600+ cities and towns across India. 190+ network participants are live on the network. Presently, over 7000 farmer producer organisations (FPOs) have registered to be a part of the ONDC network through various seller network participants. Around 400 self-help groups (SHGs), micro-entrepreneurs, and social sector enterprises have been onboarded on the network. Mobility through the ONDC network is live in 15+ cities with around 5.45 lakh taxi and auto drivers onboarded,” says Economic Survey 2025.

Exports

"Exports have been a concern, but the sector remains agile. The services industry has been a key driver of growth, while India’s exports, despite global challenges, have expanded into new and diverse markets. Notably, India now leads in shipping vessel exports with a 33% market share and has established itself as a major player in iron and steel alloys—an untapped market before 1994."

Innovation
"India's commitment to innovation is a key driver of productivity and long-term economic growth. Leading among lower-middle-income economies and ranking 7th globally in intangible asset intensity, India is outpacing many high-income nations. With innovation at its core, the country is strengthening its competitive edge and emerging as a global innovation hub, positioning itself alongside economic powerhouses like Germany and Japan."

Infrastructure
India's infrastructure push is delivering tangible economic gains, from faster port turnaround times enhancing trade efficiency to a sharp rise in clean energy adoption. The share of fossil fuels in the energy mix has fallen from 61.4% in FY21 to 52.9% in FY24, marking a decisive shift towards sustainability. With expanded telecom networks and improved access to safe water in remote areas, the government’s infrastructure focus is not just accelerating growth but also driving inclusivity across the nation"

Economy
A strong financial sector is the bedrock of economic confidence, and India's banking sector has demonstrated remarkable resilience with GNPA falling to 2.6% and returns on asset doubling to 1.4%. Despite FII outflows comparable to the COVID-19 period, India’s market capitalization-to-GDP ratio surged to 136%of GDP by December 2024 (from 124% of GDP last year), outpacing other emerging economies. This signals growing investor confidence and a more dynamic capital market. However, with corporate bonds accounting for just 18% of GDP—far below Korea’s 80% and China’s 36%—deepening the corporate debt market is critical. Expanding this segment would reduce reliance on bank loans, lower borrowing costs, and create a more diversified and resilient financial system for long-term, inclusive growth, says Rumki Majumdar, Economist, Deloitte India.

“The service sector has been fuelling growth both domestically and globally. In FY25 so far, services propped up GDP growth when manufacturing has been affected by dampening global merchandise trade. The critical role of services exports in strengthening India’s external balance and the increasing ‘servicification’ of the industrial sector adds to its importance to the Indian economy. Logistics services have regained their pre-pandemic momentum and are enhancing the user experience through digitisation. India continues to be an important partner in the changing global technology landscape through the adoption of digital technologies in business processes. Initiatives such as Open Network for Digital Commerce (ONDC) are making these transformations more inclusive. Equipping the labour force with requisite skills and creating an enabling environment through simple and transparent processes of grassroots level governance will go a long way in realising the full potential of commercial services and building resilience to global headwinds,” says Economic Survey 2025.

“Our infrastructure programme supports a variety of PPP models like buildoperate-transfer (toll and annuity), design-build-finance-operate-transfer, hybrid annuity model and toll-operate-transfer. The government has instituted many debottlenecking and facilitatory mechanisms like the National Infrastructure Pipeline, National Monetisation Pipeline and PM-Gati Sakti that have made progress. Financial market regulators have introduced reforms to encourage private participation. Yet, the uptake of private enterprise is limited in many core sectors.

The strategy to step up private participation needs coordinated action of all stakeholders involved - governments at different tiers, financial market players, project management experts and planners, and the private sector. Capacities to conceptualise projects, develop sector-specific innovative strategies for execution, and, develop high-expertise areas such as risk and revenue sharing, contract management, conflict resolution and project closure need to improve substantially. The efforts of the Union Government would need to be supplemented with wholehearted acceptance of the need for public-private partnerships in infrastructure across the country,” says Economic Survey 2025.

“The government has placed infrastructure development at the centre stage of its fiscal and public policy agenda. The capital expenditure of the union government for FY25 has been budgeted at about 3.3 times the capex for FY20. In Q1FY25, the constraints on new approvals and spending during the general elections, coupled with heavy monsoon in many regions, affected the progress of the infrastructure spending. Between July and November 2024, the pace of capex has picked up,” says Economic Survey 2025.

“Elevated valuations and optimistic market sentiments in the US raise the likelihood of a meaningful market correction in 2025. Should such a correction occur, it could have a cascading effect on India, especially given the increased participation of young, relatively new retail investors. Many of these investors that have entered the market post-pandemic have never witnessed a significant and prolonged market correction. Hence, if one were to occur, its impact on sentiment and spending may be non-trivial,” says Economic Survey 2025.

“May we live in interesting times! This Chinese proverb, often understood as an indication of impending turbulence, is pertinent. Worldwide, we see a backsliding of economic integration with geo-economic fragmentation replacing globalisation. Economic realignments and readjustments are imminent. The rise of China as a manufacturing powerhouse and its impact on the manufacturing aspirations of other nations, as well as the supply of minerals, materials, machinery, and equipment needed for energy transition, pose challenges,” says Economic Survey 2025.

“In 2014, India was ranked as the tenth-largest economy in the world. In under a decade, India surpassed the UK to reach the fourth position. She is poised to be the third largest economy by 2030, after the USA and China. By 2030, she will have a growing working-age population and healthy manufacturing sector. The country’s demographic trend highlights the growing potential for a demographic dividend.2 The currently young population, with a median age of around 28 years, compared to the ageing population of developed countries, is the key driver of the growth potential,” says Economic Survey 2025.

“India's labour market indicators have experienced substantial improvements in recent years driven by a robust post-pandemic recovery and increased formalisation. According to the Periodic Labour Force Survey, the unemployment rate has significantly declined over time, alongside positive trends in labour force participation and the worker population ratio. Factory employment data further reflects the manufacturing sector's resilience.

To fully capitalise on the demographic dividend, it is well-recognised that creating quality jobs that offer sustainable livelihoods is crucial. Further, by prioritising reskilling, upskilling, and new-skilling, the government is aiming to align the workforce with global demands, enhancing both domestic and international employability. Simplifying compliances, promoting labour flexibility, and strengthening workers’ welfare are vital for driving sustainable job growth. Lowering the fixed costs of doing business through deregulation will create room for enterprises to hire more. To boost women's workforce participation, prioritising targeted skill development and providing entrepreneurial support is being pursued. Additionally, sectors like the digital economy and renewable energy offer vast potential for creating high-quality jobs, which is essential for achieving the Viksit Bharat's vision,” says Economic Survey 2025.

“The global manufacturing landscape has undergone significant shifts over the past decade. India has been one of the dynamic economies that gained greater presence in the space gradually vacated by developed countries. A strategic emphasis on public capital formation and significant logistic improvements has underpinned this achievement. Lately, however, there have been serious challenges to global manufacturing in terms of persistent geopolitical tensions, aggressive industrial and trade policies, supply chain disruptions, and global trade slowdown. This has posed a challenge to export demand for India’s manufactured products.

Industries such as steel, cement, chemicals, and petrochemicals have stabilised industrial growth, while consumer-focused sectors like automobiles, electronics, and pharmaceuticals have emerged as growth drivers. As we progress, fostering R&D investments, innovations, enhancing the growth and formalisation of smaller manufacturers will drive growth across various sectors.

State-level analysis indicates that business reforms in states are likely to foster industrial development. Achieving India’s ambition of becoming a strong manufacturing power necessitates sustained and coordinated efforts from all tiers of government, the private sector, the skilling ecosystem, academia and R&D institutions,” says Economic Survey 2025.

“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, due to supply chain disruptions and weak external demand. In contrast, the services sector performed better, supporting growth in many economies. Inflationary pressures eased in most economies. However, services inflation has remained persistent. Although commodity prices have stabilised, the risk of synchronised price increases persists. With growth varying across economies and last-mile disinflation proving sticky, central banks may chart varying paths of monetary easing. This will lead to uncertainty over future policy rates and inflation trajectories. This apart, geopolitical tensions, ongoing conflicts, and trade policy risks continue to pose significant challenges to global economic stability.

In this global context, India displayed steady economic growth. As per the first advance estimates of national accounts, India’s real GDP is estimated to grow by 6.4 per cent in FY25. Growth in the first half of FY25 was supported by agriculture and services, with rural demand improving on the back of record Kharif production and favourable agricultural conditions. The manufacturing sector faced pressures due to weak global demand and domestic seasonal conditions. Private consumption remained stable, reflecting steady domestic demand. Fiscal discipline and strong external balance supported by a services trade surplus and healthy remittance growth contributed to macroeconomic stability. Together, these factors provided a solid foundation for sustained growth amid external uncertainties.

Looking ahead, India’s economic prospects for FY26 are balanced. Headwinds to growth include elevated geopolitical and trade uncertainties and possible commodity price shocks. Domestically, the translation of order books of private capital goods sector into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting growth. Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation and a stable macro-economic environment provide an upside to near-term growth. Overall, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential,” says Economic Survey 2025.

"Building infrastructure – physical, digital and social - has been a central focus area for the Government in the last five years. This has had various dimensions – increase in public spending on infrastructure, creation of institutions to de-bottleneck approvals and execution and innovative modes of resource mobilisation. In FY25, capital expenditure has gathered momentum post-elections.

The government has recognised the importance of continuing the pace of infrastructure building and the increasing need to promote sustainable construction practices. It is also clear that public capital alone cannot meet the demands of upgrading the country’s infrastructure commensurate with the requirements of Viksit Bharat@2047. We need to ensure increasing private participation in infrastructure by improving their capacity to conceptualise projects and their confidence in risk and revenue-sharing mechanisms, contract management, conflict resolution and project closure. The efforts of the Union Government would need to be supplemented with wholehearted acceptance of the need for public-private partnerships in infrastructure across the country. Equally important, the private sector must reciprocate, too," says Economic Survey 2025.

“Inflationary pressures have been easing globally, though risks of synchronised price pressures linger due to potential geopolitical disruptions, such as tensions in the Middle East and the ongoing Russia-Ukraine conflict. Central banks have adopted more accommodative monetary policies. However, the pace of rate cuts varies across regions depending on the growth imperatives and the pace of disinflation, creating potential divergences in economic recovery,” says Economic Survey 2025.

“A steady growth trajectory shapes the global economic outlook for 2024, though regional patterns vary. The near-term global growth is expected to be a shade lower than the trend level. The services sector continues to drive global expansion, with notable resilience in India. Meanwhile, manufacturing is struggling in Europe, where structural weaknesses persist. Trade outlook also remains clouded in the next year,” says Economic Survey 2025.

“In brief, there are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides too. State of the Economy 33 Nonetheless, the fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent,” says Economic Survey 2025.

“The Indian economy is on a steady growth path. The macroeconomic health checklist looks good. As the country aims to accelerate its economic growth rate in the coming years, it has the tailwind of strong balance sheets in the domestic corporate and financial sectors. But, globalisation is on the retreat. Hence, raising the growth average in the next two decades will require reaping the demographic dividend through a deregulation stimulus,” says Economic Survey 2025.

Finance Minister Nirmala Sitharaman tabled the Economic Survey 2024-25 in the Lok Sabha on Friday. This annual document, which precedes the Union Budget, serves as a comprehensive assessment of the nation's economic performance and outlines future economic prospects.

The Economic Division within the Department of Economic Affairs, Ministry of Finance, compiles this report with guidance from the chief economic adviser.
The Economic Survey's origins can be traced back to 1950-51, when it was initially incorporated within budget documentation.

During the 1960s, the government decided to separate it from the Union Budget, establishing the practice of presenting it one day before the Budget.
The Finance Minister is scheduled to present the Union Budget for 2025-26 on Saturday.

Budget Session 2025 Live: Lok Sabha has been adjourned for the day following the President's address. The lower house of the Parliament will now meet again on February 1, 2025 when Finance Minister Nirmala Sitharaman will present the Union Budget 2025.

"India's increasing focus on health and wellbeing aligns with the Government's vision for a healthier nation. The upcoming Union Budget 2025 should also help prioritize preventive healthcare, especially as lifestyle diseases rise, to reduce long-term costs and improve overall health outcomes.

We believe the Union Budget 2025 has the opportunity to bring transformative change by fostering a culture of holistic well-being. A key step in this direction would be rationalizing the GST from the current 18% on health and wellness products, including dietary supplements. Furthermore, expanding GST exemptions and input tax credits on dietary health and wellness products will help promote holistic wellness across the country. The right support from the Government, aligned with its Swasth Bharath initiative, India can help establish itself as a global leader in wellness, advancing the vision of a healthier, more equitable, and prosperous nation.

We urge the government to consider lowering income tax slabs helping direct sellers who are sole proprietors or small businesses. This adjustment would support the spirit of entrepreneurship and contribute to overall economic growth. Furthermore, lowering taxes would improve disposable power, allowing more number of people to invest in their health and wellbeing,” says Rajneesh Chopra, Managing Director, Amway India.

Finance Minister Nirmala Sitharaman has tabled the Economic Survey 2024-25 in Lok Sabha. The survey has likely projected India's GDP growth for FY26 between 6.3% and 6.8%.

"The Budget announced in July 2024 brought limited changes for individual taxpayers, leaving many to hope that the upcoming Budget 2025 will deliver the much-needed tax relief to alleviate their financial pressures. There is a strong expectation that the government will focus on improving taxpayers' savings by introducing reforms such as a unified tax regime and enhanced deductions.

The Dilemma of Old vs New Tax Regimes - The introduction of two tax regimes - Old Tax Regime (OTR) and New Tax Regime (NTR) - was intended to offer taxpayers flexibility, allowing them to choose the system that best suits their investments, savings habits, and preferences. However, the reality has been far more complex. Many taxpayers find themselves confused between the two regimes, often reassessing their choice not only during the year but also while filing their tax returns. In light of these complexities, the upcoming Budget should focus on simplifying the tax structure for individual taxpayers by consolidating the current dual regimes into a single, cohesive tax framework. While this shift may take time, it is anticipated that the OTR may eventually be phased out, with its abolition ideally scheduled for FY 2026-27 to provide ample time for taxpayers, employers, and financial institutions to adjust.

A Single, More Beneficial Tax Regime - Since the introduction of the NTR, the options for tax savings have been limited, making it essential to reconsider and amend the structure for the benefit of taxpayers. While the NTR is preferred as a streamlined tax system, it can be made even more effective by incorporating the following key changes:

Simplification of income tax slabs and rates:

* Increasing the basic exemption limit of income from INR 3 lakhs to INR 5 lakhs
* The differences between tax slabs are currently inconsistent at INR 2 lakhs or INR 3 lakhs. A more uniform approach is needed with consistent income gaps.
* Introducing a new 25% tax rate slab will provide further tax relief for middle-income earners. The tax rates currently stand at 5%, 10%, 15%, 20% and 30%.
* The income limit for the 30% should be enhanced from INR 15 lakhs to INR 20 lakhs.

Inclusion of popular deductions under the NTR:
* Section 80C: Allow deductions up to INR 2 lakhs for life insurance premiums, employees’ Provident Fund contributions, etc.
* Section 80D: Extend the deduction up to INR 1 lakh for health insurance premiums for self and family, addressing the growing burden of medical expenses.
* Section 80TTB: Include a deduction of up to INR 50,000 for senior citizens earning interest from deposits with banks, post offices, etc.
* 10(13A): Allow salaried taxpayers to claim HRA deductions for rental expenditure under the NTR.

These proposed amendments will make the NTR not only simpler but also more tax-efficient,” says Deepashree Shetty, Partner, Global Employer Services, Tax & Regulatory Services, BDO India.