Explore key highlights and analysis of the Economic Survey 2024-25 and Union Budget 2025-26, focusing on India’s projected GDP growth and economic momentum.
- India’s GDP is projected to grow between 6.3% and 6.8% in FY26, demonstrating strong economic momentum.
- Real GDP growth is estimated at 6.4% in FY25, aligning with its decadal average.
- Real GVA is also expected to grow by 6.4% in FY25, reflecting sustained economic activity.
- Capital expenditure (Capex) increased by 8.2% between July and November 2024 and is expected to accelerate further.
- Retail headline inflation eased to 4.9% in April-December 2024, indicating stability.
- India’s consumer price inflation is expected to align with the 4% target in FY26, ensuring price stability.
- Overall exports grew by 6.0% (YoY) during April-December 2024, supporting external trade resilience.
- India’s services export growth surged to 12.8% during April–November FY25, up from 5.7% in FY24.
- Gross FDI inflows rose from USD 47.2 billion in FY24 to USD 55.6 billion in FY25, marking a YoY growth of 17.9%.
- Forex reserves reached USD 640.3 billion as of December 2024, sufficient to cover 10.9 months of imports and 90% of external debt.
- Solar and wind power capacity addition increased by 15.8% (YoY) in December 2024, boosting renewable energy expansion.
- The BSE stock market capitalization-to-GDP ratio stood at 136% by December 2024, significantly higher than China (65%) and Brazil (37%).
- The Economic Survey emphasizes deregulation to sustain long-term economic growth.
- Continued infrastructure investment over the next two decades is necessary for sustained high economic growth.
- A ₹50,000 crore Self-Reliant India Fund has been launched to provide equity funding to MSMEs.
- Agriculture is projected to grow at 3.8% in FY25, supporting rural economic stability.
- Kharif foodgrain production in 2024 is expected to reach 1,647.05 LMT, an increase of 89.37 LMT from the previous year.
- Key drivers of agricultural growth include horticulture, livestock, and fisheries, ensuring sectoral resilience.
- The industrial sector is forecasted to grow by 6.2% in FY25, indicating continued expansion.
- Social services expenditure registered an annual growth rate of 15% between FY21 and FY25, enhancing welfare initiatives.
- Government health expenditure rose from 29.0% to 48.0%, while out-of-pocket health expenditure declined from 62.6% to 39.4% between FY15 and FY22.
- The unemployment rate fell to 3.2% in 2023-24 (July-June), down from 6.0% in 2017-18 (July-June), indicating better job prospects.
- Collaboration between the government, private sector, and academia is crucial to mitigating AI’s adverse societal effects.
Summary of Union Budget 2025-26
Income Tax & Financial Reforms
- No income tax on an average monthly income of up to ₹1 lakh, enhancing middle-class savings and consumption.
- Salaried individuals will pay nil income tax up to ₹12.75 lakh per annum under the new tax regime.
- The time limit for updated income tax returns has been extended from two to four years.
- Delay in TCS payment has been decriminalized.
- TDS on rent threshold has increased from ₹2.4 lakh to ₹6 lakh.
Union Budget : Economic Growth & Development
- The budget identifies four key development drivers – Agriculture, MSMEs, Investment, and Exports.
- Fiscal deficit is estimated at 4.8% for FY25, with a target reduction to 4.4% in FY26.
- Credit with guarantee cover for MSMEs has increased from ₹5 crore to ₹10 crore.
- ₹1 lakh crore Urban Challenge Fund launched for developing ‘Cities as Growth Hubs.’
- ₹15,000 crore SWAMIH Fund set up to complete 1 lakh stressed housing units.
- ₹20,000 crore allocated for private sector-led R&D and innovation initiatives.
- Jan Vishwas Bill 2.0 will be introduced to decriminalize over 100 legal provisions.
Union Budget : Agriculture & Rural Development
- ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ will benefit 1.7 crore farmers in 100 low-productivity districts.
- “Mission for Aatmanirbharta in Pulses” will focus on tur, urad, and masoor for increased self-sufficiency.
- Loans up to ₹5 lakh through Kisan Credit Card (KCC) under the Modified Interest Subvention Scheme.
- National Manufacturing Mission will support small, medium, and large industries to strengthen Make in India.
Education & Skill Development
- 50,000 Atal Tinkering Labs will be set up in government schools over five years.
- A Centre of Excellence in AI for Education with an outlay of ₹500 crore.
- Gyan Bharatam Mission will survey and conserve over one crore manuscripts across India.
Union Budget : Employment & Welfare Initiatives
- PM SVANidhi Scheme enhanced with higher loans and UPI-linked credit cards with a ₹30,000 limit.
- Gig workers to receive identity cards, registration on the e-Shram portal, and healthcare under PM Jan Arogya Yojana.
- FDI limit in insurance increased from 74% to 100%.
Infrastructure & Regional Development
- Nuclear Energy Mission launched for Small Modular Reactor R&D with a ₹20,000 crore outlay.
- Modified UDAN Scheme will improve regional connectivity to 120 new destinations.
Customs & Trade Policy
- Basic Customs Duty (BCD) exempted on 36 lifesaving drugs for cancer and chronic diseases.
- BCD on Integrated Flat Panel Display (IFPD) increased to 20%, while BCD on Open Cells reduced to 5%.
- BCD exempted on parts of Open Cells to promote domestic manufacturing.
- Capital goods for EV and mobile battery production are exempted from BCD.
- BCD exemption for 10 years on raw materials & components for shipbuilding.
- BCD reduced from 30% to 5% on frozen fish paste and from 15% to 5% on fish hydrolysate.
RBI MPC: First Repo Rate Cut in 5 Years
- RBI reduced the repo rate by 25 bps to 6.25% on Feb 7, 2025, marking the first cut in nearly five years, benefiting borrowers.
- Refinancing at 8.25% can lead to 15% savings per lakh for borrowers with strong credit scores.
- FD investors may see lower returns, prompting investment diversification strategies.
- Union Budget 2025 provides tax exemptions up to ₹12 lakh, enhancing savings when combined with loan interest reductions.
- The repo rate cut and tax exemptions provide a dual financial advantage for better investment and financial planning.
About RBI
- Headquarters: Mumbai
- Established: April 1, 1935
- Governor: Sanjay Malhotra
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Market Impact of RBI Liquidity Measures
- Nifty Bank (+1.6%) and Nifty Financial Services (+1.9%) surged after RBI’s liquidity measures.
- PNB and AU Small Finance Bank rose over 4%, Axis Bank gained 3%, and IDFC First Bank, HDFC Bank, BoB, and ICICI Bank also saw gains.
- RBI infused ₹1.5 trillion liquidity, raising expectations of another repo rate cut.
Export Promotion Mission
- ₹2,250 crore allocated to enhance export credit access, cross-border factoring, and MSME support.
- BharatTradeNet (BTN) to serve as digital infrastructure for international trade.
- A National Food Technology Institute in Bihar will boost agri-exports and job creation.
- Policies to revamp shipbuilding and reduce India’s maritime trade deficit by $50 billion.
- Infrastructure upgrades for air cargo, including perishable goods, to support export growth.
- Global Capability Centres in tier-two cities will focus on talent, infrastructure, and regulatory reforms to boost tourism and financial services.
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