Reports & IndicesPriority2025-01-31

Economic Survey 2024-25 Tabled in Parliament

Why focus: GS3 Economy. Essential 'How-Many-Correct' source for real GDP, agriculture, and industrial growth rate trends for FY25-26.

In News

What Happened

Union Finance Minister Nirmala Sitharaman tabled the Economic Survey 2024-25 in Parliament on January 31, 2025. The document, prepared by the Chief Economic Adviser, projected a real GDP growth of 6.3% to 6.8% for FY26. It also estimated a 6.4% growth for the current fiscal year (FY25), supported by a strong 3.8% rebound in the agricultural sector.

Why It Matters

The Economic Survey acts as the ultimate report card for the Indian economy, detailing macroeconomic trends across sectors like agriculture, industry, and services. It provides the foundational data, analytical context, and policy recommendations that frame the Union Budget, signaling the government's economic strategy to domestic and international investors.

Background

History & Context

The first Economic Survey of India was presented in 1950-51 and was initially circulated as part of the Union Budget documents. In 1964, it was delinked from the Budget to provide an independent, comprehensive context of the economy before the financial proposals were laid out. The survey is meticulously drafted by the Economics Division of the Department of Economic Affairs (DEA), Ministry of Finance, under the direct supervision of the Chief Economic Adviser (CEA). Over the years, CEAs have used the survey to float major structural ideas, such as Arvind Subramanian's pitch for Universal Basic Income in 2016-17 or the concept of 'Thalinomics' in 2019-20. The 2024-25 survey, guided by CEA V Anantha Nageswaran, arrives amid global geopolitical fragmentation and underscores India's domestic macroeconomic resilience.

What Changed

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Growth Projections: Projected a baseline FY26 real GDP growth of 6.3% to 6.8%, representing a normalization compared to the post-pandemic surges (like the 8.2% in FY24), but remaining robust globally.
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Agriculture Rebound: Estimated agricultural growth surged to 3.8% for FY25, a significant recovery from the drought-impacted 1.4% recorded in FY24.
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Industrial Moderation: Estimated industrial growth at 6.2% for FY25, showing a moderation from the previous year's high of 9.5%, though manufacturing and construction remain strong.
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Forex Buffer: Highlighted that India's foreign exchange reserves reached $634.6 billion, expanding the import cover to a comfortable 10 months, up from lower buffers in recent turbulent years.
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Investment Narrative: Highlighted that the sustained Capital Expenditure (Capex) by the central government is successfully 'crowding in' private investment, shifting the primary growth engine from consumption to investment.
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Inflation Strategy: Shifted the policy dialogue on food inflation by explicitly calling for supply-side interventions (like climate-resilient agriculture and storage) rather than relying on the RBI's monetary policy tools.

What Did NOT Change

The legal and constitutional status of the Economic Survey remains non-binding; the government is neither constitutionally obligated to present it nor required to implement its policy recommendations. The persistent challenge of structural employment generation and the need for greater private sector participation in job creation remained constant, recurring themes.

Prelims Angle

NCERT Connection

This event directly applies to concepts in NCERT Class 12 Macroeconomics, Chapter 2 (National Income Accounting). The survey relies heavily on the distinction between 'Nominal GDP' and 'Real GDP'. By projecting Real GDP growth at 6.3% to 6.8%, the Survey demonstrates the necessity of calculating economic output at constant prices (adjusting for inflation) to measure true productive growth, exactly as explained in the NCERT text. It also highlights Gross Value Added (GVA) to assess sector-wise (agriculture, industry, services) supply-side performance.

Common Misconceptions

✗ The Economic Survey is prepared by the Reserve Bank of India (RBI) or NITI Aayog.

✓ It is prepared by the Economics Division of the Department of Economic Affairs (DEA) within the Ministry of Finance, under the Chief Economic Adviser.

RBI and NITI Aayog regularly publish high-profile macroeconomic reports and structural indices, leading students to incorrectly attribute this flagship document to them.

✗ The presentation of the Economic Survey is mandated by the Constitution of India.

✓ The Economic Survey is not mandated by the Constitution. It is a government practice, not a legal requirement.

Because it is presented just one day before the Union Budget, students conflate it with the Annual Financial Statement, which IS constitutionally mandated under Article 112.

Practice Questions

Q1

How Many Correct

Consider the following statements regarding the Economic Survey of India: 1. It was delinked from the Union Budget in the year 1964. 2. It is prepared by the NITI Aayog under the guidance of the Chief Economic Adviser. 3. Article 112 of the Indian Constitution mandates the presentation of the Economic Survey before the Budget. How many of the above statements are correct?

Q2

Match the Following

Match the macroeconomic terms highlighted in the Economic Survey (List I) with their accurate descriptions (List II): List I: A. Real GDP B. Gross Value Added (GVA) C. Import Cover D. Capital Expenditure List II: 1. The number of months of imports that can be sustained by a country's current forex reserves. 2. Government expenditure resulting in the creation of physical or financial assets. 3. The total monetary value of final goods and services produced, evaluated at constant prices. 4. The measure of total output minus the value of intermediate consumption. Select the correct code:

Q3

Assertion & Reason

Assertion (A): The Economic Survey 2024-25 emphasizes the need for structural supply-side interventions rather than just monetary policy tools to manage food inflation. Reason (R): Food inflation in India is highly sensitive and easily controlled by changes in the policy repo rate set by the Monetary Policy Committee (MPC).

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