India’s Economic Survey 2024-25: Strengthening Growth Amid Global Uncertainty

New Delhi: India’s economic trajectory remains steady amid shifting global dynamics, as detailed in the Economic Survey 2024-25 presented by Chief Economic Advisor (CEA) V Anantha Nageswaran.

The report underscores India’s resilience in the face of geopolitical uncertainties, supply chain disruptions and evolving economic paradigms while emphasizing domestic reforms, deregulation and strategic investments in infrastructure and technology to drive growth.

Global Backdrop: Navigating a Changing Economic Order

The Economic Survey sets the context against a backdrop of retreating globalization and rising protectionism. The era of hyper-globalization between 1980 and 2010, which saw exponential growth in global trade, foreign direct investment (FDI), and internet penetration, is being replaced by a model centred around strategic competitiveness and supply chain security.

The past decade has witnessed a surge in trade restrictions. According to The Global Trade Alert database global trade and investment restrictions increased by over 24,000 between 2020 and 2024.

China’s dominance in manufacturing and key supply chains, particularly in the renewable energy and electric vehicle (EV) sectors, poses a challenge to India’s industrial ambitions.

The report highlights that China’s share in global manufacturing surpasses the combined output of the next ten largest economies, with an overwhelming presence in solar panels, EV batteries, and rare-earth minerals.

Given this reality, India must pivot towards greater self-reliance, reducing dependency on external sources for critical inputs, particularly in technology and manufacturing.

Domestic Growth: The Path Forward

To maintain and accelerate economic growth, the survey identifies four key pillars:

• Deregulation for Business Growth: The government aims to streamline compliance processes and ease regulatory burdens, particularly for Micro, Small, and Medium Enterprises (MSMEs). Overly complex regulations on land use, labour laws, and licensing requirements are seen as barriers to expansion, and their simplification is expected to enhance productivity and employment. Nageswaran emphasized: “Deregulation is not just about ease of doing business, it is a pathway to employment generation.” The survey notes that states which have implemented significant business reform action plans have witnessed a notable increase in industrial activity.

• Boosting Domestic Manufacturing and SMEs: India aspires to increase the share of manufacturing in its GDP by fostering a strong small and medium enterprise (SME) sector. The concept of ‘Mittelstand,’ which has driven Germany’s industrial success, is being explored as a model for India. By integrating Indian firms into global value chains, the government aims to enhance industrial competitiveness.
• Private Sector’s Role in Nation-Building: The report underscores the importance of private investment in infrastructure, innovation, and employment generation. Several industries, particularly in semiconductors, electronics, and EVs, require greater participation from private players to build resilient supply chains.
• Energy Transition with an Indian Approach: While global energy transition efforts rely heavily on China for solar and battery production, India is taking a balanced approach. Public transportation infrastructure, particularly metro and rail networks, is being prioritized to reduce dependence on private electric mobility solutions that rely on imported components.

Nageswaran warned against the risks of over-reliance on foreign supply chains, noting: “Every single panel solar panel we install, every single electric vehicle that we produce in this country, naturally, the dependence on a single source for supply keeps increasing.”

Infrastructure: The Backbone of Growth

Significant improvements in infrastructure development over the past decade have positioned India for sustained economic expansion. The survey highlights achievements across various sectors:

• Rail and Road Expansion: The turnaround time at Indian ports has been reduced from 48 to 30 hours, and the expansion of the Dedicated Freight Corridor (DFC) is expected to improve logistics efficiency.
• Telecom and Digital Connectivity: The rollout of 5G and fibre optic networks continues to enhance internet penetration, facilitating digital commerce and remote work opportunities.
• Urban Development: Initiatives like PM Awas Yojana and Amrut have expanded access to housing, water, and sewage systems, particularly in urban areas.
• Rural Infrastructure: The Jal Jeevan Mission has provided tap water to over 12.2 crore households, while the construction of roads and electrification projects has boosted rural connectivity.

Industry and Employment: Strengthening Economic Foundations

The survey outlines India’s progress in industrial production, employment generation, and skill development:

• Manufacturing and PLI Schemes: The Production-Linked Incentive (PLI) schemes have accelerated domestic production of electronic goods, semiconductors, and white goods, with air conditioners emerging as a success story.
• Employment and Labor Market Reforms: While job creation remains a priority, India’s labour laws require modernization. The government is considering flexible working-hour regulations to allow businesses to scale operations based on demand fluctuations.
• Skill Development and Higher Education: The focus on vocational training, digital literacy, and industry-academia collaboration is expected to equip India’s youth for emerging job markets. The ‘Digital Bharat Nidhi’ initiative aims to enhance skilling in AI, cybersecurity, and automation.

Nageswaran noted: “We have to ensure that every child attains foundational literacy and numeracy by the end of grade 3 by 2026. The latest annual set of education report for 2024 shows that the proportion of standard 3 children in government schools who can read up to standard 2 has gone up from 16.3 per cent to 23.4 per cent.”

India vs China: Bridging the Industrial Gap

China’s dominance in high-tech manufacturing continues to be a challenge for India’s aspirations. The Economic Survey emphasizes the need to reduce dependence on Chinese supply chains, particularly in solar panels, semiconductors, and lithium-ion batteries.

The government is actively promoting domestic production of critical components, with an aim to achieve self-sufficiency in key industrial sectors.

Growth Outlook: Sustaining Momentum in FY26

Despite global uncertainties, India’s economy is expected to maintain robust growth. Key factors supporting the positive outlook include:

• Strong Domestic Consumption: Private final consumption expenditure (PFCE) remains a key driver of GDP growth.
• Steady FDI Inflows: While global FDI has slowed, India continues to attract investments in technology, infrastructure, and manufacturing.
• Fiscal Prudence and Public Investment: Government spending on infrastructure, coupled with efforts to maintain fiscal discipline, provides a stable foundation for growth.

The Economic Survey 2024-25 presents a comprehensive roadmap for India’s economic development. By focusing on deregulation, industrial competitiveness, infrastructure development, and strategic investments in technology, India is positioning itself for long-term prosperity.

As global trade shifts towards strategic competition, India’s emphasis on self-reliance and domestic growth engines will be crucial in achieving its ambition of becoming a developed economy by 2047.