Wed. Feb 12th, 2025

Economic Survey 2024-25: Key Highlights and Policy Directions

Economic Survey 2024-25: Key Highlights and Policy Directions
Economic Survey 2024-25: Key Highlights and Policy Directions

Summary of the Economic Survey 2024-25 : The Economic Survey 2024-25, presented by Union Finance Minister Nirmala Sitharaman, outlines India’s economic performance and key policy directions ahead of the Union Budget. Prepared by Chief Economic Adviser V. Anantha Nageswaran, the survey highlights the country’s resilience despite global uncertainties and emphasizes the need for continued reforms.

Key Highlights:

  • GDP Growth Projection: India’s GDP is expected to grow between 6.3% and 6.8% in FY 2025-26.
  • Agricultural Reforms: The government has increased the collateral-free loan limit from ₹1.6 lakh to ₹2 lakh, expanded the Kisan Credit Card scheme to include fisheries and animal husbandry, and promoted sustainable farming initiatives like the NADEP composting programme.
  • Banking Sector Stability: Gross NPAs have fallen to a 12-year low of 2.6%, but rising unsecured personal loan defaults (51.9% of new NPAs) pose a concern. The RBI’s Financial Stability Report warns of interconnected risks in personal lending.
  • Capital Markets & Wealth Creation: Despite election-driven volatility, stock markets have performed strongly, increasing financial savings. The insurance and pension sectors are also growing, aiming for universal coverage.

The survey serves as a policy blueprint, guiding the government’s approach to economic stability, financial sector resilience, and sustainable development.

Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2024-25 in Parliament, offering a detailed assessment of India’s economic performance and outlining the policy priorities for the upcoming fiscal year. Prepared under the guidance of Chief Economic Adviser V. Anantha Nageswaran, the survey serves as a crucial precursor to the Union Budget, highlighting the country’s growth trajectory, financial stability, and sectoral reforms.

Growth Outlook for FY26

The Economic Survey projects India’s GDP growth to range between 6.3% and 6.8% in the financial year 2025-26. Despite global uncertainties, the Indian economy has demonstrated remarkable resilience. The report underscores the importance of continued policy reforms to sustain robust growth and strengthen the economy against external shocks.

Agricultural Reforms & Farmer Support Initiatives

To support the agricultural sector and enhance farmer incomes, the government has introduced several key measures:

  • Increased Credit Access: The cap for collateral-free agricultural loans has been raised from ₹1.6 lakh to ₹2 lakh, benefiting small and marginal farmers by improving access to institutional credit.
  • Expanded Kisan Credit Card Scheme: The Kisan Credit Card (KCC) scheme now includes fisheries and animal husbandry, offering broader financial support to rural sectors.
  • Efficient Loan Disbursal: The Kisan Rin Portal, launched in 2023, has streamlined claims under the Modified Interest Subvention Scheme, ensuring faster fund distribution.
  • Sustainable Farming Initiatives: The NADEP composting programme in Madhya Pradesh’s Chhindwara district has emerged as a model for converting biodegradable waste into organic fertilizers, promoting eco-friendly agricultural practices and reducing dependence on chemical fertilizers.

Banking Sector Stability Amid Emerging Risks

India’s banking system remains stable and well-capitalised, with gross non-performing assets (NPAs) falling to a 12-year low of 2.6%. However, the survey flags potential risks in the retail lending sector:

  • Unsecured Personal Loans on the Rise: Defaults on unsecured personal loans and credit card debt accounted for 51.9% of new NPAs in retail loans as of September 2024.
  • Interconnected Financial Risks: According to the Reserve Bank of India’s Financial Stability Report (FSR) of December 2024, many borrowers of unsecured loans also hold secured loans such as home or vehicle loans. Defaults on smaller loans could create a domino effect, impacting overall credit portfolios.

Capital Markets & Wealth Creation

Despite geopolitical uncertainties and market volatility due to elections, India’s capital markets have remained strong, driving economic growth and wealth creation:

  • Stock Market Resilience: Indian equity markets consistently hit new highs by December 2024, outperforming many emerging market peers.
  • Increased Financialisation of Savings: The growth in capital markets has facilitated capital formation, encouraging more households to invest in financial assets.
  • Insurance & Pension Sector Growth: With a long-term vision of achieving universal coverage, the government has focused on strengthening the insurance and pension ecosystem to enhance financial security.

The Economic Survey 2024-25 provides a roadmap for sustaining economic momentum while addressing potential financial risks. With a strong emphasis on agricultural reforms, banking stability, and market growth, the survey sets the stage for the upcoming Union Budget, shaping India’s economic trajectory for the next fiscal year.

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