India’s GDP to Grow at 6.3-6.8% Amid Global Risks: Economic Survey

India’s economy is expected to grow at a moderate pace of 6.3-6.8% in 2025-26, according to the Economic Survey 2024-25. While the outlook remains positive, the survey highlights several challenges, including rising global protectionism, AI-driven job disruptions, and sluggish private investment. It calls for deregulation and a greater role for the private sector in driving economic growth.

Growth Prospects and Challenges

The Economic Survey projects real GDP growth in the range of 6.3-6.8% for the next fiscal year. This comes amid global economic headwinds such as trade tensions, geopolitical uncertainties, and supply chain disruptions. The report warns that increasing global protectionism could hurt India’s exports and lead to inflationary pressures.
Private investment remains sluggish, and foreign capital inflows have slowed in 2024-25. The survey acknowledges that the prolonged election cycle in 2024 may have contributed to the hesitation in private sector spending. Stock markets, often an indicator of economic sentiment, have also retreated from their recent highs, suggesting cautious business confidence.

Government Should Step Back to Allow Business Growth

A key recommendation from the survey is that the government should "get out of the way" and allow businesses to thrive with fewer regulatory hurdles. It argues that excessive regulations stifle innovation and hinder competitiveness.

The report suggests a shift from a "guilty until proven innocent" approach in regulation to one where businesses operate with greater trust and flexibility.

India’s social structure, characterized by a hierarchical and trust-deficient business environment, has also been highlighted as a barrier to growth. The survey urges the government to focus on creating a more transparent and business-friendly ecosystem.

Rising Protectionism and Trade Risks

The survey raises concerns about growing global trade restrictions and their impact on India’s export-driven economy. With major economies like the US and China imposing tariffs and reshaping supply chains, India faces challenges in maintaining its trade competitiveness.

To counteract these threats, India must develop a forward-looking trade strategy, improve export facilitation, and reduce trade-related costs. The survey also emphasizes the importance of securing strategic partnerships and strengthening India’s position in global supply chains.

AI and Job Market Disruptions

Artificial intelligence is expected to reshape industries, leading to significant job displacement, particularly in mid- and lower-income segments. The survey warns that India’s service-based economy, especially the IT sector, is vulnerable to automation.

To mitigate this risk, India must focus on skill development and education reforms. The National Education Policy (NEP) plays a crucial role in equipping the workforce with critical thinking, creativity, and adaptability to thrive in an AI-driven world.

Need for an Improved Bankruptcy System

The survey calls for reforms in the Insolvency and Bankruptcy Code (IBC) to support micro, small, and medium enterprises (MSMEs), which form the backbone of the economy. High interest rates and strict financial regulations have limited credit access for smaller businesses. A more efficient bankruptcy system would free up capital, fostering higher productivity and economic growth.

Conclusion

India’s economic growth is set to moderate in the coming year, influenced by global uncertainties and domestic investment challenges. The Economic Survey underscores the need for policy shifts, emphasizing deregulation, private sector participation, and strategic trade planning. By addressing these key areas, India can build a resilient economy and move closer to its long-term goal of becoming a developed nation by 2047.