Published 14:09 IST, January 31st 2025
Economic Survey 2025: Inflation Declined From 5.4% In FY24 To 4.9% In Apr-Dec Of FY25
The Economic Survey completely asses the Indian economy and includes critical numbers, making it a vital pre-Budget document
Ahead of the Union Budget 2025, the Economic Survey of India which is released on January 31, projected inflation to have softened from 5.4 per cent in FY24 to 4.9 per cent, due to a reduction in core inflation.
Economic Survey 2024-2025 Highlights - Growth & Inflation
For the financial year 2025-26 or FY26, GDP growth is expected to be in the range of 6.3 per cent to 6.8 per cent.
Additionally, retail headline inflation, as measured by the change in the Consumer Price Index (CPI), has softened from 5.4 per cent in FY24 to 4.9 per cent in April to December 2024. This decline is attributed to a 0.9 percentage point reduction in core (non-food, non-fuel) inflation between FY24 and April to December 2024.
According to the World Bank, India was the top recipient of remittances in the world, driven by an uptick in job creation in OECD (Organization for Economic Cooperation and Development) economies. these two factors combined to ensure that India's current account deficit (CAD) remains relatively contained at 1.2 per cent of GDP in the second quarter of FY25.
While talking about the three most price-sensitive vegetables, tomato, onion and potato, the average food inflation rate in FY25 was 6.5 per cent, which is 1.9 per cent lower than the current food inflation. Similarly, average headline inflation was 4.2 per cent excluding these price-sensitive vegetables, which is 0.7 per cent lower than the current headline inflation.
Background
The Economic Survey completely asses the Indian economy and includes critical numbers, making it a vital pre-Budget document. It has an outlook on important aspects such as GDP to projections on forex reserves, trade deficit, and inflation, etc.
The Reserve Bank of India ( RBI ) in its last Monetary Policy Committee (MPC) meeting had marginally increased its inflation forecast for the current fiscal year to 4.8 per cent from the previous projection of 4.5 per cent, due to the adjustment to a sharp rise in September and October 2024, on the back of an unexpected spike in food prices and weakened consumption demand.
According to the International Monetary Fund (IMF), the Indian economy is likely to grow at 6.5 per cent over the next two fiscals. Data which was released earlier this month, showed that the Indian economy slowed to 6.4 per cent compared with 8.2 per cent in the previous fiscal on the back of a growth slump in the second quarter.
In last year's Economic Survey, the Chief Economic Advisor (CEA) to the Government of India, V Anantha Nageswaran had asserted that India's economy had achieved post-pandemic resilience. He also emphasised that capex-led growth strategy, hailing PLI schemes and infrastructure investments as key drivers in the Economic Survey 2023-24. He also discussed supply chain diversification and China + 1 strategy, positioning India as an attractive alternative.
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Updated 14:58 IST, January 31st 2025