Synopsis
India's economy shows resilience amid global challenges, with strong services growth, agricultural recovery, and industrial momentum driven by private consumption, as noted in the latest Economic Survey presented in Parliament.Key Takeaways
- GDP growth forecasted at 6.4% for FY25.
- Private consumption expected to rise to 61.8% of GDP.
- Agriculture sector growth projected at 3.8%.
- Industrial growth anticipated at 6.2%.
- Global geopolitical risks remain a concern.
New Delhi, Jan 31 (NationPress) India’s domestic economy remains stable amidst global uncertainties, propelled by strong growth in the services sector, a resurgence in agriculture, and the industrial sector gaining traction due to increasing private consumption, as per the Economic Survey presented in Parliament on Friday.
The initial advance estimates from the National Statistical Office indicate that the real gross domestic product (GDP) growth for FY25 is projected to be 6.4 percent, the Survey asserts.
According to the survey, in terms of aggregate demand, private final consumption expenditure at constant prices is predicted to rise by 7.3 percent, aided by a bounce back in rural demand. The share of private consumption in GDP (at current prices) is expected to grow from 60.3 percent in FY24 to 61.8 percent in FY25, the highest level since FY03. Meanwhile, gross fixed capital formation (at constant prices), reflecting investment activities, is also estimated to rise by 6.4 percent.
On the supply side, real gross value added (GVA) is also expected to increase by 6.4 percent. The agriculture sector is anticipated to recover with a growth of 3.8 percent in FY25. The industrial sector is projected to grow by 6.2 percent in FY25, as stated in the survey.
Significant growth rates in construction and utilities like electricity, gas, and water supply are expected to bolster industrial growth. The services sector is projected to sustain a robust growth rate of 7.2 percent, driven by vigorous activity across financial, real estate, professional services, public administration, defense, and other service areas, according to the survey.
The agriculture sector continues to perform strongly, consistently exceeding trend levels. The industrial sector has also regained its footing above pre-pandemic levels. The services sector's strong growth in recent years has brought it closer to trend levels, the survey adds.
The report emphasizes that geopolitical risks remain heightened due to ongoing conflicts, which pose significant threats to the global economic landscape. It underscores the necessity of reinforcing the levers of domestic growth amid these risks.
Such global uncertainties can affect growth, inflation, financial markets, and supply chains. Escalating conflicts in the Middle East or the Russia-Ukraine situation could lead to market adjustments regarding sovereign risks in the affected areas and disrupt global energy markets. Currently, the oil market is adequately supplied. However, any damage to energy infrastructure could tighten supply and add uncertainty to the global economic forecast, the survey indicates.
Middle East tensions have led to disruptions in trade through the crucial Suez Canal, which accounts for 15 percent of worldwide trade. Consequently, several shipping companies have rerouted their vessels around the Cape of Good Hope, extending delivery times by an average of 10 days or more. These disruptions have resulted in increased freight rates along major shipping lanes, consequently impacting global trade activities, the survey concluded.
