India’s Economic Survey 2024-25: A Critical Analysis of Growth, Risks, and Opportunities

India’s economy is expected to grow by?6.4% in 2024-25, and the government believes this growth is strong because of?stable inflation, government spending, and the booming services sector. However, a deeper look into the details shows that while?some parts of the economy are doing well, others have weaknesses that could slow down growth. The?biggest concern is that private businesses are not investing enough money, which means the economy may not expand as fast in the future. Another problem is that?global conditions are unpredictable, with inflation, trade restrictions, and wars affecting how much India can sell to other countries. The government says that?public spending and policies will keep the economy strong, but if businesses don’t feel confident enough to invest more money, the economy may?slow down to 5.5%.

The Big Picture of India’s Economy in 2024-25

The world economy is?still struggling with inflation?(higher prices for goods),?problems in supply chains, and?uncertainty in global trade. This affects?India’s ability to grow because it depends on selling goods and services to other countries. India’s economy has?three major strengths: a?strong services sector (like IT and banking), stable agriculture production, and government investments in roads, railways, and infrastructure. But it also has?three major risks:?private sector investment is weak, manufacturing growth is slow, and global instability could make things worse.

The government believes that?growth will continue steadily?because?inflation is under control, but services inflation (higher prices for things like healthcare, education, and transportation)?is still a problem. If the prices of these services?keep increasing, people may spend less, which could slow down economic growth. At the same time,?if private businesses don’t increase their investments, the economy?won’t have enough momentum to grow as expected.

Looking at India’s Growth Compared to the Past

When we compare India’s growth today with?previous years, we see that the economy has had?ups and downs based on global events and government policies. Here is how India’s economy has grown in the past:

• 2004?– India’s GDP grew by?7.9%?because of strong domestic demand and a good global economy.
• 2008?– The?Global Financial Crisis?hit, and growth fell to?3.1%?because businesses were afraid to invest, and global trade slowed down.
• 2014?– After policy changes and stable global conditions,?India’s growth bounced back to 7.4%.
• 2020?– The?COVID-19 pandemic?caused the economy to shrink by?7.3%?because of lockdowns and disruptions in businesses.
• 2022?– A strong recovery led to?8.7% growth, but this was partly because the economy was rebounding from the pandemic slowdown.
• 2024?– The government expects?6.4% growth, but private sector confidence is not as strong as it needs to be.

If we look at history,?every time there was a crisis, India’s growth slowed down more than expected. This means that?if global conditions worsen or if private businesses don’t invest enough, India’s growth could end up lower than 6.4%.

Understanding the Risks to India’s Growth

To get a better picture of how strong the economy really is, we need to look at?different possible outcomes based on risks. If everything goes well,?India’s growth could be 6.8%, but if things don’t go as planned,?it could fall to 5.5%. Let’s break this down:

• Best-Case Scenario (6.8% Growth)?– If inflation stays low, private businesses start investing more, and global trade improves, India can grow faster than expected.
• Baseline Scenario (6.4% Growth)?– This is the government’s prediction, which assumes?services will keep growing, inflation will stay low, and investments will slowly increase.
• Worst-Case Scenario (5.5% Growth)?– If global trade slows down, inflation increases, and private sector confidence remains weak,?India’s growth will fall below 6%.

Debating the Government’s Optimism

The government’s Economic Survey?paints a positive picture, but if we critically analyze the situation, we find?two very different viewpoints.

• Optimistic View: The government says?the economy is strong?because inflation is under control, public spending is high, and demand for services is growing.
• Skeptical View: Many experts argue that?India’s private businesses are not investing as much as they should, and?if they don’t invest more, the economy will slow down in the future.

If private sector investment remains low,?there will be fewer new jobs, less money in circulation, and slower economic activity. The?big question?is whether the government can?create enough policies to convince businesses to invest more money.

Predict India’s Growth

If we use?advanced prediction models, we see that India’s economy is on track to grow, but the rate of growth depends on?how quickly businesses start investing again. Here are the?three possible outcomes from AI-based economic predictions:

1. If private investment increases quickly?→?GDP could grow by 7.1% per year over the next 5 years.
2. If investment remains slow?→?GDP growth stays at 6.3% per year.
3. If global conditions worsen and investment doesn’t pick up?→?GDP could fall to 5.4% per year.

This shows that?India’s future depends heavily on how businesses respond to economic policies. If businesses?wait too long to invest, growth?will slow down, and fewer jobs will be created.

Key Areas That Need Attention

There are?three big areas?that need to be improved for India’s economy to?stay strong and grow at a steady pace:

1. More Private Investment?– Businesses need to feel?confident enough?to invest in new projects, create jobs, and expand production.
2. Stronger Manufacturing Growth?– Right now, most of India’s growth is?coming from the services sector, but manufacturing is still weak. A strong economy needs both services and manufacturing to grow at the same time.
3. Global Trade Stability?– India needs to make sure that?exports continue to grow, even if global conditions become unstable.

Understanding the Role of Inflation

One major concern is?inflation, which means that?prices of goods and services keep rising. Inflation can be good if it stays?low and stable, but if it gets out of control,?it reduces people’s purchasing power. The government says?inflation is under control, but?services inflation is still high, which means?things like healthcare, education, and transportation are becoming more expensive. If this continues,?people will have less money to spend, and the economy could slow down.

Actionable Steps to Keep the Economy Strong

To make sure?India’s growth remains stable, the following?actions should be taken:

1. Encourage Businesses to Invest?– The government should create policies that make it easier for businesses to invest money, such as tax incentives or reduced regulations.
2. Boost Manufacturing & Exports?– Right now,?India’s exports are slowing down, so new trade agreements should be created to?open more global markets.
3. Keep Inflation Under Control?– The government should continue?keeping an eye on inflation, especially in the?services sector, where prices are rising fast.
4. Support Small & Medium Businesses?– Many small businesses struggle to get loans. If?more financial support is given, these businesses can?grow and create more jobs.
5. Improve Infrastructure?– Roads, railways, and ports?must be improved?so that businesses can operate efficiently and lower costs.

The State of Employment in India

Employment in India has?improved?in recent years. The unemployment rate has?dropped from 6% in 2017-18 to 3.2% in 2023-24, which means more people have found jobs

More people are self-employed.

• The number of people working for themselves has increased from?52.2% in 2017-18 to 58.4% in 2023-24.
• This means more individuals are starting businesses or working independently, but it also means they might not have stable incomes

Fewer people have salaried jobs.

• The number of people working in regular salaried jobs?decreased from 22.8% to 21.7%?in the same period.
• Many workers prefer flexible work arrangements, and some businesses are not hiring as many permanent employees

Women’s employment has changed significantly.

• In rural areas, fewer women have salaried jobs. Instead, more women are working in?family businesses or self-employment.
• In urban areas,?the percentage of women in salaried jobs has dropped from 52.1% in 2017-18 to 49.4% in 2023-24

Factory jobs are increasing.

• Large factories (with more than 100 workers) now?employ 80% of all factory workers, while small factories employ fewer workers
• The?electronics industry is growing rapidly, creating more job opportunities

The Role of AI in Employment

Artificial Intelligence (AI) is changing the way jobs work. Some people worry that?AI will replace human workers, while others believe that?AI will help people do their jobs more efficiently. Here’s what the report says about AI’s impact on employment:

AI could replace some jobs.

• AI is expected to take over?repetitive and low-skill jobs?in industries such as healthcare, education, and finance.
• Entry-level jobs may become harder to find, making it difficult for young workers to start their careers

AI may not replace all jobs.

• AI can?help human workers instead of replacing them?by increasing productivity and improving decision-making.
• Medium- to high-skill jobs?are less likely to be replaced?because AI has limitations

Challenges of AI adoption.

• AI requires?huge amounts of computing power and data, which makes it expensive to develop.
• Only a?few large companies?currently control AI development, raising concerns about fairness and accessibility

Preparing for AI’s impact.

• The government needs to create?training programs?to help workers transition into AI-powered industries.
• AI policies should ensure that?workers are not unfairly replaced

Skill Gaps: Are Indian Workers Ready for the Future?

Many workers in India?do not have the right skills?for modern jobs. The biggest skill-related problems are:

Most workers do not receive formal training.

• 65% of India’s workforce has never received vocational training, meaning they lack specialized skills needed for high-paying jobs

Mismatch between education and jobs.

• Many people with?college degrees?work in jobs that do not require higher education.
• 53% of graduates and 36% of postgraduates?are working in jobs below their qualification level

Growing importance of digital and AI skills.

• The?fastest-growing jobs require AI, data analysis, and digital skills, but many workers are not trained in these areas.

Government plans to fix skill gaps.

• The government is expanding?vocational training programs?and reforming?labor laws?to help workers develop new skills

Conclusion: What Lies Ahead for India?

India’s economy?is growing, but it faces challenges. The government’s?prediction of 6.4% growth is realistic, but it depends on many factors. If?private sector investment increases, India’s growth could go even higher, but if businesses?remain cautious, the economy?could slow down to 5.5%.?The key to long-term success is to boost private investment, support manufacturing, and keep inflation stable.

Overall,?India is in a strong position, but risks should not be ignored. The government should focus on?making businesses feel confident enough to invest, which will ensure?steady growth, job creation, and a stronger economy in the years to come.

AI is?changing the job market, and?many workers are not yet ready?for this shift. To ensure long-term success, India must?increase investment, support businesses, and train workers for the future. If these steps are not taken,?growth could slow to 5.5%, making it harder to create jobs and improve people’s lives.