Indian economy expected to grow 6.5-7% in 2024-25: Economic Survey

The predictions being lower than RBI's 7.2 per cent, Survey said it was 'cognizant' of the fact that 'market expectations are on the higher side'

India's gross domestic product (GDP) is expected to grow at 6.5-7 per cent in FY25, according to the Economic Survey released on Monday. The survey noted that "market expectations are on the higher side."

The survey's predictions are lower than the Reserve Bank of India's 7.2 per cent but align with the 7 per cent forecast by other agencies like the International Monetary Fund (IMF) and the Asian Development Bank (ADB).

The survey stated that India's growth drivers have supported economic growth in FY24 despite uncertain global economic performance. This year, merchandise and services exports are likely to see an uptick.

"A normal rainfall forecast by the India Meteorological Department and the satisfactory spread of the southwest monsoon thus far are likely to improve agriculture sector performance and support the revival of rural demand," it said, adding that structural reforms like the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) have "matured" and are "delivering envisaged results."

On the other hand, the survey noted that the monsoon still has "some ways to go," and a note of caution was warranted in the private sector.

"Private capital formation, after good growth in the last three years, may turn slightly more cautious because of fears of cheaper imports from countries with excess capacity," it added.

"Considering these factors, the survey conservatively projects real GDP growth of 6.5–7 per cent, with risks evenly balanced, cognizant of the fact that market expectations are on the higher side," it said.

The Economic Survey also mentioned that the current GDP level is close to the pre-pandemic trajectory in Q4FY24.

The survey highlighted that global financial markets have scaled new heights in the past year, with investors betting on global economic expansion.

"However, any corrections in the elevated financial market valuations may have ramifications for household finances and corporate valuation, negatively impacting growth prospects," it added.

It also stated that hiring in the information technology (IT) sector has slowed down in FY24. Even if it may not decline further this year, "it is unlikely to pick up significantly."

The Economic Survey is an annual document presented by the government ahead of the Union Budget to review the state of the economy. It provides an overview of the short-to-medium-term prospects of the economy.

The Economic Survey is prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance under the supervision of the chief economic adviser.

The first Economic Survey was released in 1950-51 when it used to be a part of the budget documents. In the 1960s, it was separated from the Union Budget and tabled a day before the presentation of the Budget.

The Union Budget for 2024-25 will be presented by Finance Minister Nirmala Sitharaman on July 23.