India's Gross Domestic Product (GDP) is projected to grow at 6.5-7 percent in FY25 with prospects for continued strong growth on the back of improving balance sheets in the private sector.
In the Economic Survey for 2023-24, tabled in the Lok Sabha on Monday, rural demand will pick up amid projections of normal rainfall and a pick-up in commodity exports along with growth prospects in advanced economies.
While India's current GDP level in Q4 FY24 is seen close to the pre-pandemic path, an increase in geopolitical conflicts in 2024 “will lead to supply displacements, higher commodity prices,” the survey said.

Reviving inflationary pressures and easing monetary policy with potential repercussions for capital inflows may also affect the Reserve Bank of India's (RBI) monetary policy stance.
The GDP growth rate predicted by the survey is lower than the 8.2 per cent growth recorded in FY 2023-24 and 7 per cent growth in the last three financial years.

In a foreword to the survey, Chief Economic Adviser V Ananda Nageswaran pointed out that while the Indian economy is strong and stable, there will need to be a big domestic boom to recover.

Read in English: India’s FY25 GDP growth seen at 6.5-7 per cent in real terms, says Economic Survey

“The Indian economy has shown resilience in the face of geopolitical challenges and remains on a strong wicket and stable footing. The Indian economy has consolidated its post-Covid recovery with policymakers ensuring economic and financial stability.
Yet change is the only constant for a country with high growth aspirations. As the environment has become extraordinarily difficult to reach agreements on key global issues such as trade investment and climate, more sleep is needed on the domestic front to sustain the recovery,” he said.

Sustaining the interest of foreign investors will require effort amid high interest rates in developed countries, which imply higher financing costs and higher opportunity costs of investing abroad, he said.

Further, “developing economies must compete with active industrial policies in developed economies that include substantial subsidies to encourage domestic investment.
Despite impressive developments in the last decade, uncertainties and interpretations regarding transfer pricing, taxes, import duties and non-tariff policies remain to be addressed. Lastly, rising geopolitical uncertainties could have a major impact on capital flows despite other reasons for wanting to invest in India,” he said.

Subsequently, overall employment in non-consolidated non-agricultural enterprises (excluding construction) declined to 10.96 crore from 11.1 crore in 2015-16, with a fall of 54 lakh workers in manufacturing. But the expansion of employment in trade and employment has reduced the number of workers in unaffiliated firms to an overall 16.45 lakh between these two periods, he said.

Between FY19 and FY23, the share of private non-financial corporations in the overall GFCF (gross fixed capital formation) increased by only 0.8 percentage points from 34.1 per cent to 34.9 per cent. This was largely driven by their rapidly increasing share in the additional stock of dwellings, other buildings and structures.

In addition to capital stock in terms of machinery and equipment, their stock started growing strongly from FY22, which should be sustained based on their improved bottom line and strength of balance sheets to generate high-quality jobs,” he said.

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