Dharmakirti Joshi, Chief Economist, CRISILThe Economic Survey‘s expectation of GDP growth decelerating to 6.5-7% in fiscal 2025 is based on the right reasons. The forecast is in alignment with CRISIL’s own projection of 6.8% growth and acknowledges the resilience of the economy in the first quarter, as reflected in the strong print of the PMI and solid tax collections.
We, however, maintain our forecast because of anticipated pressures from high interest rates and reducing pent-up demand. Then there are heightened global risks that create a downward bias to the forecasts.
Given the uncertain environment, we consider it prudent for the Budget to sustain ongoing support to infrastructure buildout, while creating an enabling environment and spurring private investment in strategic and employment generating sectors.
Food inflation has been another major challenge.
How much will the Budget reflect the measured advice of the survey? We are about to find out.
GDP Growth Expectations are Realistic
Aditi Nayar, Chief Economist, ICRA
While the Economic Survey has pegged GDP growth for FY25 at 6.5-7%, which is conservative per market estimates, we believe these projections are quite realistic (ICRA est: 6.8%) given the global and agroclimatic uncertainties.
Moreover, the expected narrowing of the wedge between the growth in GDP and GVA, which had benefitted from a contraction in subsidies in FY24, portends a slower economic growth in FY25. Further, the impact of the elections on activity in some sectors will temporarily stem the pace of growth in H1, followed by a back-ended pick up in H2.
We are circumspect whether a sustained growth of over 7% can be achieved in the medium term, largely owing to concerns around the outlook for exports. India‘s growth would therefore increasingly rely on domestic demand, necessitating sustained job creation.
Highlighting Challenges and Potential
Sunil Kumar Sinha, Senior Director, Ind-Ra
Economic Survey is an annual report card of the country’s economic performance. However, often in the past, it had also contained analysis of the challenges and suggestions to address short to medium term growth prospects. A good way to assess this Survey therefore is to see if it has done so.
Let me pick up three such issues – (i) employment and skill creation, (ii) growth and expansion of MSME and (iii) energy transition. In a way all three issues are interlinked, and the survey elaborates on the challenges being faced in each of these areas. It calls for a tripartite pact – between the government, the private sector and academia – to facilitate requisite skill development.
The survey acknowledges that compliance burden coupled with slow/poor access to finance is robbing MSMEs of growth. On energy transition, it acknowledges India’s mission-mode approach but also highlights the trade-offs.
Skilling in Age of AI and Other Tests for India
Rajani Sinha, Chief Economist, CareEdge
The survey has very aptly highlighted key focus areas like employment generation, labour skilling, agriculture sector reforms, supporting MSMEs and managing green transition to ensure that India’s economic growth momentum is sustained. India is in an enviable position of having a large working age population at the time when the developed economies are ageing. The survey talks in detail about the urgent need to tap into India’s demographic dividend through adequate productive job creation. The role of AI in labour market and the opportunity for India to position itself as a leader in this area are also highlighted.
The survey talks about the global trend of rising fragmentation along geopolitical lines and the need for economies to adjust to the new landscape. It also suggests India’s inflation targeting framework should target inflation excluding food.
This suggestion has its merit as food inflation is mainly because of supply-side factors.