Page 15 - Policy Economic Report_Feb'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

5. Indian Economy

India’s economic growth

The Economic Survey 2024-25 presented by Smt. Nirmala Sitharaman, Minister of Finance and Minister
of Corporate Affairs, in January 2025, provides a comprehensive analysis of India's economic performance
and future prospects. Key highlights from the survey include:

1. Economic Growth

GDP Growth: India's GDP grew by 6.2% in the October-December quarter of 2024, driven by increased
government and consumer spending, as well as a robust Kharif crop output and a revival in rural
demand. India's real GDP growth is estimated at 6.4 per cent in FY25 (as per first advance estimates
of national income). Real gross value added (GVA) is also estimated to grow by 6.4 per cent FY25. The
real GDP growth in FY26 is expected to grow between 6.3 and 6.8 per cent.

2. Inflation Trends
Headline Inflation: Inflation eased from 5.4% in FY2024 to 4.9% in FY2025, attributed to
moderating commodity prices and effective monetary policies.

3. Foreign Exchange Reserves

India’s FOREX reserves stood at USD 640.3 billion as of the end of December 2024, sufficient to
cover 10.9 months of imports and approximately 90% of the country’s external debt. The reserves
also provide an import cover of about 11 months, indicating robust external sector resilience.
India’s external debt remained stable over the past few years, with the external debt to GDP ratio
standing at 19.4 per cent at the end of September 2024.

4. Capital Expenditure (Capex)
The government's capital expenditure grew by 8.2% between July and November 2024, focusing
on infrastructure development to stimulate economic growth. For the fiscal year 2024-25, the
capital expenditure target is set at ?9.5 lakh crore, marking a 28.2% increase compared to the
previous year and 2.8 times the level of FY20. Between FY20 and FY25, government capital
expenditure on key infrastructure sectors grew by 38.8%, underscoring the emphasis on
enhancing the nation's infrastructure.

5. Sectoral Performance
Agriculture: The agriculture sector demonstrated resilience, with an average growth rate of 5%
between FY2017 and FY2023. The Agriculture and Allied Activities sector contributed
approximately 16% of the country’s GDP for FY24 (PE) at current prices.
Industry: The industrial sector showed mixed performance, with manufacturing growth remaining
subdued, while infrastructure development received a boost through increased capital
expenditure. The sector is expected to grow by 6.2 per cent in FY-25 (first advance estimates),
driven by robust growth in electricity and construction.

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