Economic Survey 2024-25: Stability Amid Global Uncertainty, Calls for Deregulation to Boost Growth

(Source – Indian Express, Section – Explained – Page No. – 21)

Topic: GS3 – Indian Economy

Context

● The Economic Survey 2024-25 analyzes India’s economic performance amidst global uncertainties.

 Analysis of the news:

Global Economic Challenges

• The Economic Survey highlights two key concerns in the global economy: increasing trade protectionism and China’s manufacturing dominance.
• Trade and investment growth have slowed, reflecting a shift away from globalization.
• Rising uncertainty and economic fragmentation indicate signs of “secular stagnation.”
• Additionally, China’s outsized role in global production, accounting for one-third of global manufacturing, poses challenges.
• However, disruptions in global supply chains may lead to a reset, providing opportunities for economies like India.

India’s Economic Performance

• Despite global challenges, India’s economy remains stable.
• Real GDP growth for FY25 is projected at 6.4%, with an estimated range of 6.3%-6.8% for FY26.
• Private final consumption expenditure, a key driver of demand, is set to rise to 61.8% of GDP, the highest since FY03.
• On the supply side, Gross Value Added (GVA) has surpassed pre-pandemic levels and aligns with the decadal average, indicating a steady economic trajectory.

Inflation and Employment Trends

• The Survey notes that core inflation is moderating, but food inflation has risen from 7.5% in FY24 to 8.4% due to supply disruptions and weather-related factors.
• However, experts argue that inflation, excluding a few volatile food items, is close to the target.
• Employment indicators have improved, supported by post-pandemic recovery and increased job formalization.
• Key metrics such as the unemployment rate and labour force participation show positive trends.

Policy Recommendations: Deregulation for Growth

• The Survey emphasizes the need to deregulate the economy to boost employment, income generation, and consumer demand.
• The CEA advocates for reducing regulatory hurdles, particularly for small businesses, to lower operational costs and encourage hiring.
• Citing the Business Reform Action Plan (BRAP), the Survey suggests that enterprise-friendly policies can drive industrial growth, particularly in aspiring and emerging states.

Shifting Tone in the Economic Survey

• While the Survey acknowledges India’s post-pandemic recovery, it also raises concerns about limitations in domestic production capacity.
• The CEA warns that excessive regulation could lead to stagnation.
• This cautious outlook contrasts with the optimism expressed in the 2023 Survey, which had predicted strong growth momentum post-pandemic.
• The shift in tone suggests a recognition of structural challenges that need urgent policy action to sustain long-term economic expansion.

Practice Question:  The Economic Survey 2024-25 highlights India’s economic resilience amidst global uncertainties. Discuss the key challenges and recommendations outlined in the Survey and their implications for India’s long-term economic growth. (250 Words /15 marks)

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