INDIA’S economy is likely to grow at 6.3-6.8 per cent in 2025-26 on the back of strong macroeconomic fundamentals, though strategic and prudent policy management will be required to navigate global headwinds, said the Economic Survey on Friday. The GDP growth rate is estimated to slip to 4-year low of 6.4 per cent in the current financial year ending March 2025, close to its decadal average. The key pre-Budget document also emphasised that the country needs to grow at 8 per cent for up to two decades to become a developed nation or Viksit Bharat by 2047. Also, to achieve this growth, the investment rate must rise to 35 per cent of GDP, up from the current 31 per cent, and develop the manufacturing sector further and invest in emerging technologies such as AI, robotics, and biotechnology.

 

“The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent,” said the survey authored by a team lead by Chief Economic Advisor V Anantha Nageswaran. Navigating global headwinds will require strategic and prudent policy management and reinforcing the domestic fundamentals, it added. The survey noted that a steady growth trajectory shapes the global economic outlook for 2024, though regional patterns vary.

 

The near-term global growth is expected to be a shade lower than the trend level. The services sector continues to drive global expansion, with notable resilience in India. Meanwhile, manufacturing is struggling in Europe, where structural weaknesses persist. Trade outlook also remains clouded in the next year, the survey added. It further said inflationary pressures have been easing globally, though risks of synchronised price pressures linger due to potential geopolitical disruptions, such as tensions in the Middle East and the ongoing Russia-Ukraine conflict. “In brief, there are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides too,” it said. To realise the aspirations of Viksit Bharat by 2047, the survey stressed that it is important that the medium-term growth outlook of India be assessed in the context of emerging global realities of Geo-Economic Fragmentation (GEF), Chinese manufacturing prowess, and global dependency on China for energy transition efforts. is a significant contribution that Governments around the country can make to foster innovation and enhance competitiveness.

 

‘India a bright spot’: INDIA remains a bright spot on the global manufacturing map despite persistent geopolitical tensions, aggressive industrial and trade policies, supply chain disruptions and global trade slowdown, and fostering R&D investments, and innovations enhancing the growth and formalisation of smaller manufacturers will further drive growth across various sectors, the Economic Survey 2024-25 said on Friday. The global manufacturing landscape has undergone significant shifts over the past decade and India has been one of the dynamic economies that gained a greater presence in the space gradually vacated by developed countries. With 2.8 per cent of the global share in manufacturing, compared to China’s 28.8 per cent, India has a large opportunity to climb up the ladder. The country also has a substantial scope to improve the contribution of the industrial sector in GDP in relation to its comparator countries.

 

“It is more so in the light of the IMF’s observation that manufacturing production is increasingly shifting towards emerging market economies, particularly China and India. India stands a good chance of benefiting from the trends in global industrial diversification,” according to the Survey. In India, the industrial growth in FY25 is expected higher than the previous five-year average. The industrial sector grew by 6.2 per cent in FY25, driven by robust growth in electricity and construction. According to the Survey, industries such as steel, cement, chemicals, and petrochemicals have stabilised industrial growth, while consumer-focused sectors like automobiles, electronics, and pharmaceuticals have emerged as growth drivers for the country.

 

Currently, India is the second largest cement producer in the world after China. In April-November of FY25, the country’s crude steel and finished steel production registered a growth of 3.3 per cent and 4.6 per cent. The Indian automobile industry is a significant driver of economic growth, offering a diverse range of domestically produced vehicles. In FY24, the industry recorded domestic sales growth of 12.5 per cent. Recognising the sector’s potential, the Government has extended the PLI Scheme by one year. According to the Economic Survey, State-level analysis indicates that business reforms in States are likely to foster industrial development.

 

“Achieving India’s ambition of becoming a strong manufacturing power necessitates sustained and coordinated efforts from all tiers of Government, the private sector, the skilling ecosystem, academia and R&D institutions,” the Survey document suggested. In a rather unsupportive global environment, it calls for lasting, coordinated efforts from all tiers of Government, the private sector, the skilling ecosystem, academia and R&D institutions, as well as financial stakeholders to enable India to realise its ambition as a manufacturing powerhouse, the Survey stressed.