The Economic Survey will be presented first in the Lok Sabha at 12 noon, followed by the Rajya Sabha at 2 PM, in line with parliamentary procedures. This document, compiled by the Economic Division of the Department of Economic Affairs under the supervision of the Chief Economic Adviser, offers a detailed review of India’s economic performance over the previous financial year (April-March 2024-25) and provides an outlook for the next fiscal year.

The Economic Survey is crucial as it not only outlines key economic indicators and trends but also sets the stage for the Union Budget, offering valuable clues about the government’s fiscal policy, potential reforms, and the budget’s broad focus areas.

The History and Significance of the Economic Survey

The Economic Survey has been an integral part of India’s budgetary process since its inception in 1950-51. Initially included as part of the Union Budget documents, the Survey was separated from the Budget in the 1960s and presented a day before the Union Budget. Over the years, it has evolved into a comprehensive and data-driven document that provides an assessment of the country’s economic health and growth prospects.

The Survey has also had a tradition of adopting central themes that highlight critical issues affecting the economy. For instance, in 2022, the theme was ‘Agile Approach’, reflecting India’s adaptive economic strategies in response to the COVID-19 pandemic. In 2023, the theme was ‘Recovery Complete’, celebrating the broad-based recovery from the pandemic’s economic shock. Last year, the 2024 Survey focused on ‘Economic Resilience’, emphasizing India’s ability to withstand external challenges like global inflation and geopolitical tensions.

This year, attention will be focused on the central theme of the Economic Survey, which could signal the government’s strategy for addressing weaker GDP growth and consumption concerns. India’s GDP growth slowed to 5.4% in the July-September quarter of 2024-25, lower than expected, with forecasts for the full year now revised to 6.4-6.6%. The Economic Survey will provide insights into how the government plans to address these economic headwinds in the upcoming Budget.

Economic Context and the Road to Budget 2025

As the Indian economy grapples with slow growth, consumption challenges, and global uncertainties, the Budget 2025 will be scrutinized for measures to revitalize growth. India’s economy had registered impressive growth rates of 8.2% in 2023-24 and 8.7% in 2021-22, but the pace has cooled down recently. The Reserve Bank of India (RBI) has downgraded its growth forecast for 2024-25 to 6.6%, while the government’s estimate is slightly more optimistic at 6.4%.

Despite these challenges, India remains one of the fastest-growing major economies. The government’s strategies and fiscal policies for sustaining this growth will be under the spotlight in the Budget, particularly in light of weak consumption data and weaker-than-expected GDP numbers.

Key Traditions: The Halwa Ceremony and Budget Session

An important tradition preceding the Budget presentation is the ‘Halwa Ceremony’. This year, the event took place on January 24, marking the beginning of the printing process for the budget documents. The ceremony is a symbolic gesture to kick-start the preparations for the Union Budget and signifies the lockdown at the Ministry of Finance, where officials involved in budget preparation are not allowed to leave the compound until the documents are presented in Parliament.

The Budget session of Parliament is scheduled to begin on January 31 and will run until April 4, 2025, with a break from February 14 to March 10. On January 31, President Droupadi Murmu will address the joint sitting of both Houses of Parliament, outlining the government’s priorities for the upcoming year. The Union Budget will then be presented by Finance Minister Nirmala Sitharaman on February 1, with a speech detailing fiscal policies, revenue, expenditure proposals, and taxation reforms.

The Road Ahead: Scrutiny and Implementation

Once presented, the Union Budget will undergo detailed debate and discussions in Parliament, with lawmakers examining its provisions and proposing amendments. After approval by both Houses, the Budget will set in motion the implementation of the government’s fiscal roadmap for 2025-26. Key measures outlined in the Budget will be vital in shaping India’s economic trajectory, particularly in the face of global uncertainties and domestic growth concerns.

For Finance Minister Nirmala Sitharaman, this will be her seventh presentation of the Union Budget, surpassing the record set by former Prime Minister Morarji Desai, who presented five full budgets and one interim budget. The Budget 2025 will also be delivered in a paperless format, continuing the digital tradition of recent years.

As the nation looks ahead to the Union Budget, all eyes will be on the Economic Survey for clues about the government’s fiscal priorities and its vision for India’s economic future. The next few days will be crucial as the Survey and Budget presentations unfold, offering a glimpse into the economic direction for India in 2025-26.

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In November 2024, the performance across the key industrial sectors showed positive results. The Mining sector grew by 1.9%, while the Manufacturing sector posted a solid growth of 5.8%. The Electricity sector also saw a healthy increase, with a growth rate of 4.4%.

The overall IIP for November 2024 stood at 148.4, compared to 141.1 in the same month the previous year. The breakdown of the indices across sectors revealed that Mining stood at 133.8, Manufacturing at 147.4, and Electricity at 184.1.

The Ministry of Statistics and Programme Implementation releases the quick estimates of IIP on the 12th of every month, or the previous working day if the 12th happens to be a holiday. These estimates are compiled using data collected from source agencies, who in turn gather the information from producing factories and establishments. It is important to note that these quick estimates are subject to revisions in subsequent releases, as per the revision policy of IIP.

The November 2024 figures highlight a positive trend in India’s industrial growth, signaling continued recovery in key sectors of the economy.

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India’s private sector experienced robust growth in December, registering its highest performance in four months. Both the manufacturing and services sectors saw accelerated growth, driven by a rise in new business inflows and increased job creation.

The HSBC Flash India Manufacturing PMI rose to 57.4 in December from 56.5 in November, signaling improved business conditions. Gains in production, new orders, and employment fueled the recovery, with a rise in domestic demand playing a pivotal role.

Meanwhile, the services sector continued to lead growth, reflected in the HSBC Flash India Services PMI Business Activity Index, which climbed to 60.8 in December, up from 58.4 in November. Service providers recorded a sharper increase in sales and backlogs, showcasing the sector’s resilience.

Private sector firms also expanded their workforce significantly in December, with job creation reaching a new survey peak. Employers added both permanent and temporary staff to meet the growing demand, and backlogs of work rose at the fastest pace since May 2024.

Ines Lam, Economist at HSBC, stated, “In this flash release, the small rise in the headline manufacturing PMI in December was mainly driven by gains in current production, new orders, and employment. The expansion in new domestic orders quickened, suggesting a pick-up in growth momentum in the economy.” Lam also noted that sustained increases in input costs have prompted manufacturers to continue raising selling prices. The output price index rose to its highest level since February 2013.

Demand for Indian goods and services experienced its sharpest increase since July, with both domestic and international orders contributing to growth. New export orders expanded at the fastest rate in five months, with the manufacturing sector outperforming services in export growth.

Business optimism strengthened for the second consecutive month, reaching its highest level since September 2023. Manufacturers and service providers alike expressed positive demand expectations, with stronger customer relations boosting their confidence.

Although cost pressures eased slightly from the 15-month high seen in September, input costs for items like food, freight, and labor continued to rise. Despite this, firms increased selling prices, though at a slower rate than November’s near 12-year high.

Manufacturers stepped up input purchases in December, benefiting from improved vendor performance. Pre-production inventories grew, while finished goods stocks contracted as companies utilized inventory to meet rising demand.

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