In a significant development ahead of the Union Budget 2025-26, the Economic Survey 2024-25, tabled by Finance Minister Nirmala Sitharaman in Parliament on Friday, sheds light on India’s evolving economic landscape.
Chief Economic Advisor (CEA) V. Anantha Nageswaran emphasized the country’s shift in the foreign direct investment (FDI) landscape, highlighting that India is no longer just competing with emerging markets but also with industrialized nations. “One of the biggest magnets for FDIs is the prospect of profitable returns that India is providing,” Nageswaran stated.
He further pointed out a concerning trend, noting that “FDI as a share of GDP has come down much faster than the export share of GDP globally.” This observation underlines the need for focused measures to boost FDI inflows, especially as India positions itself as a global economic player.
Artificial Intelligence Revolutionizing India’s Services Sector
The Economic Survey also highlighted the accelerating integration of artificial intelligence (AI) in India’s services sector. Nageswaran revealed that major strides are being made in sectors such as banking, finance, healthcare, telecom, retail, and transport, where AI is transforming operations and boosting efficiency. “The services sector stands out for its swift embrace of AI, thanks to national initiatives and cutting-edge technologies,” the CEA noted.
The rapid adoption of AI in these industries is seen as a key driver of India’s economic growth, with the potential to significantly enhance productivity and create new opportunities across sectors.
Inflation Trends: A Mixed Picture
In terms of inflation, the CEA reported that India’s overall inflation rate stands at 5.2%, with food price inflation closer to 8%. However, he provided a more optimistic outlook when excluding volatile items like tomatoes, onions, potatoes, pulses, and vegetables. “When we exclude these items, the inflation trends show a more subdued picture,” Nageswaran explained, offering a nuanced perspective on the inflationary pressures affecting the economy.
Export Growth: Subdued but Optimistic OutlookOn the export front, the Economic Survey painted a mixed picture. While merchandise exports remain subdued, the outlook appears more positive when excluding sectors like petroleum and gems and jewelry. The CEA’s comments on the state of exports underscore the challenges faced by key sectors but also highlight opportunities for growth in other areas.
As India prepares for the upcoming Union Budget 2025-26, the insights from the Economic Survey will serve as crucial touchstones for shaping policy decisions that aim to address these economic challenges and leverage the country’s growing potential on the global stage.
