Economic Survey 2024-25: India Targets 6.3-6.8% GDP Growth, Eyes ₹10.62 Lakh Crore GST Collection

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Economic Survey 2024-25

Key Highlights:

  1. GDP Growth Projections for FY26: India’s GDP growth rate for FY2025-26 is pegged between 6.3% and 6.8%, slightly lower than earlier optimistic estimates.
  2. GST Collection Growth: GST collections are projected to grow by 11%, reaching ₹10.62 lakh crore, despite a recent slowdown in revenue growth.
  3. Focus on Reforms: The survey emphasizes systematic deregulation to bolster small and medium enterprises (SMEs), dubbed India’s “Mittelstand.”
  4. Economic Challenges Identified: Weak manufacturing performance, sluggish credit growth, and declining service sector activity highlight areas of concern.
  5. Policy Directive: The government aims to balance demand stimulation, fiscal prudence, and reform-driven growth in the upcoming Union Budget 2025-26.

New Delhi: Finance Minister Nirmala Sitharaman tabled the Economic Survey 2024-25 in the Lok Sabha, setting the tone for India’s fiscal and economic strategy for the coming year. This crucial document, presented a day ahead of the Union Budget 2025-26, projects India’s GDP growth rate for FY26 to be in the range of 6.3 to 6.8%—slightly lower than previous estimates, reflecting global headwinds and domestic challenges.

With an optimistic 11% growth in GST revenue, the survey highlights the government’s commitment to policy reforms, deregulation, and economic resilience, aiming to empower India’s small and medium enterprises (SMEs) and stimulate inclusive growth.

GDP Growth Outlook: A Realistic Approach

The GDP growth forecast of 6.3-6.8% aligns closely with the International Monetary Fund’s (IMF) estimate of 6.5%, while slightly trailing the World Bank’s projection of 6.7%. These figures are lower than the government’s advance estimate of 6.4% released in January and the 6.5-7% range highlighted in last year’s Economic Survey.

Factors affecting economic growth in FY24:

  1. Manufacturing Sector Slowdown: Weak output and reduced capital expenditure hindered growth in Q2 and Q3.
  2. Decline in Business Activity: January business activity hit a 14-month low, driven primarily by a slowdown in the services sector.
  3. Urban Consumption Stagnation: FMCG companies reported muted demand, and credit growth remained sluggish.

The survey emphasizes that achieving the upper band of the 6.8% target will require strong second-half growth driven by revitalized private consumption and capital expenditure.

GST Collections: A Bright Spot Amid Challenges

India’s GST revenue is projected to grow by 11%, reaching ₹10.62 lakh crore, as per the survey. However, policymakers flagged a slowdown in revenue growth over the last three months, calling for a renewed focus on compliance and expanding the tax base.

Economic experts believe that buoyant GST collections reflect:

  • Expansion of formalization within the economy.
  • Increased efficiency in tax administration.

Economic Challenges Highlighted in the Survey

Despite optimistic projections, the Economic Survey identifies several hurdles India must overcome to achieve sustained economic growth:

  1. Manufacturing Weakness: GDP growth fell to 6.5% in Q2, marking the lowest quarterly growth in two years.
  2. Rural and Urban Demand Gap: Slow consumption in urban areas and plateauing rural demand remain concerns.
  3. Global Headwinds: External challenges like geopolitical tensions and inflation pose risks to growth.

Policy Direction: The Mittelstand Focus and Systematic Deregulation

The Economic Survey emphasizes systematic deregulation to unlock India’s true economic potential. Inspired by Germany’s Mittelstand model, the policy aims to strengthen SMEs by reducing red tape and fostering innovation.

  • Key Recommendations:
  • Streamline regulations to boost India’s manufacturing capabilities and enhance competitiveness.
  • Attract long-term investments in critical industries.
  • Promote employment-sensitive growth to address job creation and income inequality.
  • Benefits of Deregulation:
    The survey argues that targeted deregulation will make India more economically resilient, improve competitiveness, and help SMEs withstand global economic shocks.

Looking Ahead: Key Priorities for the Union Budget

The Union Budget 2025-26, to be presented on February 1, is expected to reflect themes highlighted in the Economic Survey, such as:

  1. Infrastructure Boost: Increased allocations for highways, urban housing, and railways.
  2. Healthcare Investments: Greater funding for public health schemes and infrastructure.
  3. Tax Reforms: Possible revisions in personal income tax slabs to revive consumption.
  4. Green Energy Transition: Incentives for green hydrogen, electric vehicles (EVs), and renewable energy.

Conclusion: A Balanced Growth Strategy Amid Uncertain Times

The Economic Survey 2024-25 outlines a pragmatic yet optimistic vision for India’s economy, emphasizing policy consistency, deregulation, and inclusive growth. While challenges like weak urban consumption and manufacturing slowdowns persist, the government’s strategy aims to maintain growth momentum while adhering to fiscal prudence.

As the nation awaits the Union Budget, all eyes are on Finance Minister Nirmala Sitharaman to deliver a blueprint that balances growth aspirations with fiscal discipline, ensuring India’s economic resilience in a volatile global landscape.

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