By Prof Madan Mohan Goel, Former Vice-Chancellor
North News
Chandigarh, January 31
The Economic Survey 2024-25, tabled by Finance Minister Nirmala Sitharaman on January 31, 2025, presents a sobering analysis of India’s economic trajectory amidst global uncertainties. Chief Economic Advisor V. Anantha Nageswaran’s preface to the survey aptly highlights the survey’s intrinsic connection to both vision and action, emphasizing that transforming these economic insights into tangible changes is akin to a “Yagna” (sacred fire sacrifice) and “Sadhana” (spiritual discipline). This metaphor underscores the rigorous and mindful process required to steer India toward its goal of becoming a ‘Viksit Bharat’ by the centenary of its independence in 2047.
Sluggish Growth Amid Global Challenges
India’s real GDP growth is projected at 6.3% to 6.8% for FY26, marking a period of economic stagnation in the near term. This slower growth forecast for 2024-25, pegged at 6.4%, represents a significant deceleration from the previous fiscal year. It is the weakest pace in four years, underscoring the economic challenges that lie ahead. The survey identifies several factors contributing to this slowdown, with a particular emphasis on a weaker manufacturing sector and slower corporate investments. While the government’s push for public capital expenditure (capex) remains robust, the private sector’s sluggish investment, alongside subdued consumer spending due to persistent inflation and falling wages, indicates an economic undercurrent that may stifle the pace of growth.
In essence, India’s growth trajectory needs to surpass 8% annually at constant prices for the next decade or two to meet its aspirations of achieving developed nation status by 2047. This challenge becomes even more pressing given the broader global economic landscape, where various external pressures, including trade uncertainties and geopolitical tensions, continue to weigh heavily on domestic economic performance.
Needonomics Perspective: Fulfilling India’s Needs Through Economic Strategy
Through the lens of Needonomics (the economics of needs), the Economic Survey offers a nuanced perspective on India’s path to economic prosperity. The concept of Needonomics calls for an economic model centered not only on GDP growth but on fulfilling the needs of every citizen—whether through job creation, equitable income distribution, or ensuring that the benefits of growth reach the most vulnerable segments of society. In the context of India’s growth projections, Needonomics challenges policymakers to rethink traditional economic metrics. It encourages the pursuit of policies that prioritize social welfare, inclusivity, and sustainability rather than focusing solely on short-term growth figures. The slow recovery in the manufacturing sector and the stagnation in corporate investment point to a need for structural reforms that can invigorate domestic industry while improving livelihoods across the nation.
Investment and Public Spending: The Silver Lining
Despite the overall slowdown, the Economic Survey notes that investment activity is poised to pick up in the coming fiscal year, driven largely by public capex. With the government focusing on infrastructure development, capacity utilization in the manufacturing sector remains above its long-term average, providing a glimmer of hope for a revival in industrial output. Additionally, private sector order books have exhibited steady growth, reflecting optimism and potential for recovery.
While business investment remains subdued, the expectation is that a more stable macroeconomic environment, coupled with deregulation measures that reduce the cost of doing business, will spur private investments over time. A significant part of India’s economic rejuvenation lies in creating an environment conducive to entrepreneurial activity, which, in turn, will drive job creation and economic empowerment.
Role of Artificial Intelligence (AI) in Employment Generation
One of the most thought-provoking sections of the Economic Survey 2024-25 is its special essay on Artificial Intelligence (AI) and its potential impact on employment generation in India. The advent of AI is undoubtedly transformative, but its implications for labor markets have been a topic of intense debate globally.
The survey approaches this issue with cautious optimism. While there are fears that AI may lead to massive job losses due to automation, the survey posits that these fears might be exaggerated. It suggests that the disruptive impact of AI could be mitigated by harnessing the technology for growth in new sectors, particularly in industries where AI can complement human capabilities rather than replace them.
Moreover, the survey refrains from proposing technological solutions to all of the world’s problems but rather advocates for a balanced approach. While AI’s potential to streamline processes and improve productivity is undeniable, India must focus on building a robust ecosystem for innovation, skills development, and digital literacy to ensure that its workforce remains competitive in an AI-driven economy.
Structural Reforms: Key to Overcoming the Slowdown
In response to the challenges highlighted by the slowdown, the Economic Survey underscores the importance of structural reforms to unlock India’s growth potential. By focusing on deregulation and reducing the cost of doing business, the government can create a more conducive environment for entrepreneurship and investment. These reforms would not only help stimulate economic activity but also facilitate job creation, an urgent need in the wake of global economic pressures.
Additionally, there is a strong call for enhancing the efficiency and reach of public service delivery. In particular, improving education, healthcare, and social security systems will ensure that the benefits of growth are more evenly distributed across society, enabling inclusive development. Such measures are critical for addressing India’s diverse needs, particularly in rural areas and among economically disadvantaged groups.
Conclusion: Path Forward for Viksit Bharat
India stands at a crossroads in its economic journey. While the forecast for 2024-25 suggests slower growth, the Economic Survey offers a hopeful outlook, emphasizing that with the right mix of investment, innovation, and inclusive reforms, the country can still achieve its long-term aspirations. By applying the principles of Needonomics, India can reshape its economic strategy to focus not just on growth numbers but on meeting the needs of its people. The upcoming decade will be pivotal. India’s pursuit of a 8% growth rate to realize its vision of becoming a developed nation by 2047 is an ambitious goal, but with strategic planning, commitment to reforms, and a focus on inclusivity, it is achievable. The Economic Survey 2024-25 serves as both a reality check and a roadmap for navigating the challenges ahead, with a clear emphasis on transforming economic adversity into opportunity for all.
(Prof. Madan Mohan Goel, a distinguished academic and administrator, is a three-time Vice-Chancellor and a superannuated Professor of Economics from Kurukshetra University, Kurukshetra (KUK). With 46 years of teaching experience and 17 years in administrative roles, he has served as Vice-Chancellor of Starex University, Gurugram, and Jagannath University, Jaipur. He also held the position of Director-cum-Vice-Chancellor at the Rajiv Gandhi National Institute of Youth Development)
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