New Delhi: The Economic Survey 2024-25, presented in Parliament on Friday, forecasts India's economy to expand between 6.3 percent and 6.8 percent in FY26.
The survey emphasizes that the nation's economic fundamentals are solid, bolstered by a stable external account, fiscal discipline, and robust private consumption.
It highlights the government's intention to promote long-term industrial growth through an emphasis on research and development (R&D), support for micro, small, and medium enterprises (MSMEs), and investment in capital goods. These initiatives are designed to boost productivity, foster innovation, and enhance global competitiveness.
The report states, "The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation, and stable private consumption. Considering these factors, we anticipate growth in FY26 to be between 6.3 and 6.8 percent."
Additionally, the survey predicts a decline in food inflation in Q4 FY25, attributed to seasonal drops in vegetable prices and the onset of the Kharif harvest. A favorable Rabi crop is also expected to help stabilize food prices during the first half of FY26. However, potential risks to inflation include adverse weather conditions and rising international agricultural prices.
On the global front, energy and commodity prices have decreased, contributing to a stable core inflation outlook. Nevertheless, uncertainties in the global political and economic landscape continue to pose challenges.
Furthermore, the survey notes that India's foreign exchange reserves remain robust, covering 90 percent of external debt and providing over ten months of import coverage. Reserves rose from USD 616.7 billion in January 2024 to USD 704.9 billion in September 2024, before adjusting to USD 634.6 billion as of January 3, 2025. The stability of capital flows has been crucial in reinforcing India's external financial strength.
The survey revealed a notable expansion in the formal employment sector, with net subscriptions to the Employees' Provident Fund Organisation (EPFO) increasing from 61 lakh in FY19 to 131 lakh in FY24, more than doubling in this period.
It stated, "India's formal sector has experienced substantial growth, as evidenced by net EPFO subscriptions rising from 61 lakh in FY19 to 131 lakh in FY24."
The Economic Survey offers an optimistic perspective on India's economic growth for FY26, supported by robust macroeconomic fundamentals, an increase in formal employment, and stable external reserves.
Nevertheless, challenges such as global uncertainties, adverse weather conditions, and fluctuations in international prices continue to pose risks to the economy in the upcoming year.
