India’s economy projected to grow 6.3% to 6.8% in FY2025-26: Economic Survey

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India’s economy is projected to grow between 6.3% and 6.8% in the financial year 2025-26, according to the Economic Survey 2024-25 tabled in Parliament on Friday, January 31, just a day before the Union Budget.

The survey highlights the country’s robust economic fundamentals, which are supported by a stable external account, fiscal consolidation, and steady private consumption.

The government plans to promote long-term industrial growth by focusing on research and development (R&D), micro, small, and medium enterprises (MSMEs), and capital goods. These initiatives aim to enhance productivity, innovation, and global competitiveness.

Food inflation is expected to moderate in Q4 FY25 due to seasonal declines in vegetable prices and the arrival of the Kharif harvest. A favorable Rabi crop is also expected to help keep food prices in check during the first half of FY26. However, risks to inflation persist due to adverse weather conditions and rising international agricultural prices.

Global energy and commodity prices have softened, contributing to a stable core inflation outlook. However, uncertainties in the global political and economic climate continue to pose challenges.

India’s foreign exchange reserves remain strong, covering 90% of external debt and providing an import cover of over ten months. The reserves increased from USD 616.7 billion in January 2024 to USD 704.9 billion in September 2024, before settling at USD 634.6 billion by January 3, 2025. Stable capital flows have been key in supporting India’s external strength.

The survey also highlighted notable growth in formal employment. Net subscriptions to the Employees’ Provident Fund Organisation (EPFO) more than doubled from 61 lakh in FY19 to 131 lakh in FY24.

Overall, the Economic Survey offers a positive outlook for India’s economy in FY26, underpinned by strong macroeconomic fundamentals, increasing formal employment, and stable external reserves. However, challenges such as global uncertainties, adverse weather events, and fluctuations in international prices remain.

Additionally, the survey emphasized that for India to achieve its vision of becoming a developed nation, or “Viksit Bharat”, by 2047, the country needs to maintain an average growth rate of around 8% for the next decade or two. This goal is essential to realize the economic aspirations for the centenary of India’s independence.

India’s GDP grew by 5.4% in real terms in the July-September quarter of FY2024-25, falling short of the Reserve Bank of India’s forecast of 7%. The economy grew by 7.2% in FY2022-23 and an impressive 8.2% in FY2023-24, maintaining its position as the fastest-growing major economy.

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