The Economic Survey tabled by Union Finance Minister Nirmala Sitharaman on Friday showcased key developments in the Indian economic landscape, from growth numbers to banking sector performances. It highlighted that India’s economy is projected to expand between 6.3 per cent and 6.8 per cent in the financial year 2025-26 (FY26).

Notably, the IMF has kept India’s GDP growth forecast unchanged at 6.5 per cent for FY25 and FY26 while the World Bank has maintained a projection of 6.7 per cent .

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During a press conference, Chief Economic Adviser (CEA) V Anantha Nageswaran painted a stark picture of how Indian corporates are compensating their workers and employees and called for a more equitable distribution of incomes.

“If you look at the growth in profitability and the growth in employment expense — a combination of hiring and compensation — there is a huge disparity between the two, which has been highlighted by several private players themselves in the last few months,” he said.

The Economic Survey highlighted that with credit growth outpacing nominal GDP growth for two successive years, the credit-GDP gap narrowed to (-) 0.3 per cent in Q1 of FY25 from (-) 10.3 per cent in Q1 of FY23.

Therefore, despite the double-digit growth in bank credit post-April 2022, the credit-to-GDP ratio is below the trend line, indicating that the recent growth in bank credit is sustainable, it said.

The Economic Survey highlighted the performance of the banking and financial sector saying the sector remains stable and well-capitalised and is catering to the financing needs of the economy.

It said the rapid pace of technological evolution in India, particularly in areas like AI, blockchain, and data analytics, has created new opportunities to reimagine traditional financial services and processes.

AI and large language models (LLMs) have enhanced customer service through interactive chatbots and personalised experiences, while blockchain offers secure, transparent, and efficient transactions, it said.

Highlighting the capital markets, the Economic Survey said they are central to India’s growth story, catalysing capital formation for the real economy, enhancing the financialisation of domestic savings, and enabling wealth creation.

Notably, investor participation has been a contributor, with the number of investors growing from 4.9 crore in FY20 to 13.2 crore as of 31 December 2024.

The survey indicated that food inflation, as tracked by the Consumer Food Price Index (CFPI), rose to 8.4 per cent in FY25 (April-December) from 7.5 per cent in FY24. This surge was primarily driven by a handful of food items, particularly vegetables and pulses.

Extreme weather events significantly impacted agricultural output, the survey said.

While core inflation (excluding food and fuel) eased to 4.1 per cent, service-related inflation in housing, healthcare, and education continued to rise.

The Economic Survey further highlighted the developments in India’s external sector saying it continued to display resilience amidst global headwinds.

Total exports (merchandise and services) have registered steady growth in the first nine months of FY25, reaching USD 602.6 billion.

In order to achieve the goal of Viksit Bharat@2047, the Economic Survey said this would entail sustained economic growth of close to 8 per cent every year for at least a decade.

To achieve this growth, the investment rate must rise to approximately 35 per cent of GDP, up from the current 31 per cent , it added.

The CEA highlighted that achieving the status of a developed economy by 2047 will require a socially responsible private sector.

It further highlighted that India’s development aspirations require a substantial investment in infrastructure over the next decade.

While estimates of the required spending differ in scale, there is general agreement that current infrastructure spending needs to be increased to achieve these objectives.

India’s services sector has been the steadiest contributor to the gross value added (GVA) in the economy. Its contribution to the total GVA at current prices has increased to about 55 per cent in FY25 from 50.6 per cent in FY14, the survey said.