UPSC 2025 India Economy Survey: Key Insights

1. State of the Economy: Getting Back into the Fast Lane

 This chapter examines India’s economic recovery, contextualized by the global scenario and backed by key economic indicators.

• Global Economic Scenario:

  Global GDP grew by 3.3% in 2023. Manufacturing slowed across Europe and parts of Asia. Services showed resilience. Core goods inflation fell to very low levels. The Geopolitical Economic Policy Uncertainty Index rose from 121.7 in 2023 to 133.6 in 2024, and the World Trade Uncertainty Index increased from 8.5 in 2023 to 13 in 2024.

• Indian Economy: Current Status:

  Real GDP is projected at 6.4% for FY25. Private Final Consumption Expenditure is estimated to grow by 7.3%. Real GVA is also projected at 6.4%. The unemployment rate declined to 3.2% in 2023-24 from 6.0% in 2017-18.

   

 

UPSC Indian Economy

2. Monetary and Financial Sector Developments: The Cart and the Horse

This chapter analyzes India’s monetary and financial sectors, supported by data on credit growth, asset quality, and market developments.

• Performance of the Banking Sector and Credit Availability:

  The credit-GDP gap narrowed to (-) 0.3% in Q1 of FY25 from (-) 10.3% in Q1 of FY23. The GNPAs ratio of SCBs declined to 2.6% at the end of September 2024. The CRAR of SCBs stood at 16.7% in September 2024. RBI’s Financial Inclusion Index improved from 53.9 in March 2021 to 64.2 by March 2024.

• Developments in Capital Markets:

  ₹11.1 lakh crore was mobilized from primary markets during Apr-Dec 2024 (a 5% increase YoY). Demat accounts rose by 33% YoY to 18.5 crore in December 2024. IPOs increased by 32.1% YoY to 259 in Apr-Dec 2024. The BSE stock market capitalization to GDP ratio stood at 136% in December 2024.

• Developments in the Insurance Sector: Total insurance premium grew by 7.7% in FY24, reaching ₹11.2 lakh crore. Insurance penetration declined from 4% in FY23 to 3.7% in FY24.

• Developments in the Pension Sector: The number of subscribers reached 783.4 lakh in September 2024, a 16% YoY growth.

• Efficacy of Insolvency Law:  ₹3.6 lakh crore realized in resolution of 1,068 plans till September 2024, representing 161% against liquidation value.

3. External Sector: Getting FDI Right

This chapter examines India’s external sector with data on trade, balance of payments, and foreign investment flows.

• Global Trade Dynamics:

  The Hormuz Strait channels approximately 21% of global petroleum liquid consumption.

• Global Trade Performance in 2024 (Q3, YoY):

  Merchandise exports grew by 3.5%, imports by 3%, services exports by 7.9%, and imports by 6.7%. India’s average tariffs on dutiable items decreased from 48.9% (2000) to 17.3% (2024).

• Trend in India’s Trade Performance:

  Overall exports grew by 6% YoY in the first nine months of FY25, with services growing by 11.6%. Total imports reached USD 682.2 billion, a growth of 6.9%. India commands 10.2% of the global export market in ‘Telecommunications, Computer, & Information Services’, ranking 2nd globally.

• India Balance of Payments:    CAD stood at 1.2% of GDP in Q2 of FY25.

• Performance of FDI Flows of India:

  Gross FDI inflows increased by 17.9% in FY25 compared to FY24, surpassing USD 1 trillion cumulatively from April 2000 to September 2024.

• Foreign Exchange Reserves of India:

  Stood at USD 640.3 billion in December 2024, covering 10.9 months of imports.

• External Debt Position of India:

  The external debt to GDP ratio was 19.4% in September 2024.

• 4. Prices and Inflation: Understanding the Dynamics

          This chapter analyzes inflation trends in India, supported by specific CPI and CFPI data.

• Global Inflation: Declined to 5.7% in 2024 from 8.7% in 2022 (IMF).

• Domestic Inflation:

  India’s Retail inflation reduced from 5.4% in FY24 to 4.9% in FY25 (April-December 2024).

• Food Inflation:

  Consumer Food Price Index (CFPI) increased from 7.5% in FY24 to 8.4% in FY25. Excluding TOP vegetables, average food inflation was 6.5% in FY25.

• Outlook:

  IMF projects India’s inflation at 4.4% in FY25 and 4.1% in FY26. RBI expects headline inflation at 4.2% in FY26.

5. Medium Term Outlook: Deregulation Drives Growth

 This chapter discusses India’s growth outlook with projections and data on global fragmentation.

• Medium-term Growth Outlook:

  India aims for 8% average growth to achieve Viksit Bharat by 2047 and is projected to be a USD 5 trillion economy by FY28 and USD 6.307 trillion by FY30 (IMF). UNIDO projects China to account for 45% of global manufacturing by 2030. Over 24,000 new trade and investment restrictions were imposed globally between 2020 and 2024.

6. Investment and Infrastructure: Keeping It Going

 This chapter highlights infrastructure developments with specific data on achievements.

• Developments across Infrastructure Sectors:

  17 new pairs of Vande Bharat trains introduced (Apr-Oct 2024). 91 Gati Shakti multi-modal Cargo Terminals commissioned. India has a total road network of 63.4 lakh km, including 146,195 km of NH. 5853 km of NH constructed in FY25. Approximately 76% of Bharatmala projects (26,425 km) awarded, with 18,926 km constructed by 2024. Airport cargo handling capacity reached 8.0 million MT in FY24. 619 routes operationalized under UDAN. Average container turnaround time in major ports reduced to 30.4 hours during FY25 (Apr-Nov) from 48.1 hours in FY24. Installed power capacity rose by 7.2% YoY to 456.7 GW (Nov 2024), with renewables at 47% share (209.4 GW). 5G services launched in all states/UTs by Oct 2024. Over 12 crore families gained piped drinking water under Jal Jeevan Mission since 2019. Over 89 lakh houses completed under PMAY-Urban. 1010 km of metro operational in 23 cities.

7. Industry: All About Business Reforms

 This chapter examines industrial performance with specific production and market share data.

• Overall Sector Performance:

  Manufacturing expected to grow by 6.2% in FY25. India holds 2.8% of the global manufacturing share. India’s per capita cement consumption is 290 kg (global average 540 kg). Domestic automobile sales rose by 12.5% in FY24. India manufactures 99% of its smartphones but holds only 4% of the global electronics market. Textiles contribute 11% to India’s manufacturing GVA. India’s pharmaceutical industry has grown at 10.1% annually over the last five years and is the third-largest globally by volume. Gujarat, Maharashtra, Karnataka, and Tamil Nadu account for 43% of India’s industrial value.

8. Services: New Challenges for the Old War Horse

This chapter analyzes the services sector with data on its contribution, exports, and growth rates.

• Services sector performance in India:

  Contributes 55.3% of total GVA in FY25. India ranked 7th worldwide in global services exports with a share of 4.3% (2023). Computer and business services exports account for ~70% of India’s services exports. Indian Railway is the 4th largest network globally, with 8% growth in passenger traffic in FY24. Road transport accounted for 78% of total GVA of transport services. Tourism sector contributed 5% to GDP in FY23, creating 7.6 crore jobs. India received 1.8% of world tourism receipts, ranking 14th. IT services grew at a trend rate of 12.8% over the last decade (FY13–FY23), increasing their share of overall GVA from 6.3% to 10.9%. GCC numbers increased to >1,700 in FY24. India is the 2nd largest telecom market with 84% teledensity. Karnataka and Maharashtra accounted for >25% of India’s total service sector GSVA in FY23.

9. Agriculture and food management: Sector of the future

This chapter provides data on agriculture’s contribution, production, and the impact of government interventions.

• Overall Contribution:

  Contributes ~16% of the country’s GDP for FY24 (PE) and supports ~46.1% of the population. India produces 11.6% of the world’s cereals. MSP for Arhar and Bajra increased by 59% and 77% over the cost of production for FY25.

• Seeds-quality and use of fertilisers:

  ICAR produced 1.06 lakh quintals of breeder seeds in 2023-24.

• Rainfall and irrigation system:

  Only 55% of the net sown area is irrigated, with >2/3rd facing drought.

• Agriculture credit:

  India has 7.75 crore operational KCC accounts.

• Allied sectors: Fisheries grew at a CAGR of 8.7%, and livestock at 8%.

• Food processing industries:

  Accounts for 12.41% of total organized sector employment. Agri-food exports constituted ~11.7% of India’s total exports in FY24, with processed food exports rising from 14.9% in FY18 to 23.4% in FY24.

10. Climate and Environment: Adaptation Matters

 This chapter uses data to highlight India’s climate vulnerability and adaptation efforts.

• Introduction:

  India’s per capita carbon emissions are 1/3rd of the global average. An additional carbon sink of 2.29 billion tonnes CO2 equivalent created between 2005 and 2021.

• Bringing adaptation to the forefront:

  India is the 7th most vulnerable country to climate change. Adaptation spending rose from 3.7% of GDP in FY16 to 5.6% in FY22.

• Energy transition:

  Non-fossil fuel sources account for 46.8% of the total installed electricity capacity (2,13,701 MW).

11. Social Sector: Extending reach and driving empowerment

 This chapter provides data on social sector expenditure and outcomes.

• Social services expenditure:

  Grew at a CAGR of 15% from FY21 to FY25 (BE).

• Outcomes:

  Urban-rural MPCE gap declined to 70% in 2023-24 from 84% in 2011-12. Gini coefficient improved in rural areas to 0.237 in 2023-24 (from 0.266) and urban areas to 0.284 in 2023-24 (from 0.314). GER in higher education increased from 23.7% (2014-15) to 28.4% (2021-22). Share of out-of-pocket expenditure in health declined from 62.6% to 39.4%. Connectivity provided to 99.6% of targeted habitations under PMGSY. 2.69 crore houses completed under PMAY-G since 2016. 12.2 crore households provided with tap water under Jal Jeevan Mission. 10.05 crore rural poor households mobilized into SHGs under DAY NRLM.

12. Employment and Skill development: Existential priorities

 This chapter uses employment and skill development data to analyze India’s workforce.

• State of employment:

  Unemployment rate declined to 3.2% in 2023-24 from 6.0% in 2017-18. LFPR increased to 50.4%, and WPR to 47.2% (Q2 FY25). Female LFPR rose to 41.7% in 2023-24 from 23.3% in 2017-18. Net additions to EPFO subscriptions more than doubled to 131 lakh in FY24 from 61 lakh in FY19.

• Skill development:

  Only 4.9% of youth (15-29 years) received formal vocational training (PLFS 2023-24). Over 1.24 crore enrolled in Craftsmen Training Scheme at ITIs. PMKVY trained 1.57 Cr and certified 1.21 Cr. Women’s participation under PMKVY is 58% (FY25).

13. Labour in the AI Era: Crisis or Catalyst?

 This chapter examines AI’s impact on labor markets with investment and job risk data.

• AI Scenario:

  Global corporate AI investments totaled USD 761 billion (2021-2023). ILO estimates 75 million jobs globally at risk of automation. NASSCOM projects Indian AI market growth at 25-35% CAGR by 2027.

Indian Services Sector