1 FEB 2025

UNDERSTAND UPSC

Industrial sector:
ECONOMY • Q1 saw a strong growth of 8.3 per cent, but growth moderated
PRE-CONTEXT
in Q2 due to three key factors.
ECONOMIC SURVEY 2024-25 • First, manufacturing exports slowed signi cantly due to
THE HINDU, PG.NO: MULTIPLE PAGES. weak demand from destination countries, and aggressive trade
and industrial policies in major trading nations.
News: “Economic Survey 2024-25 tabled in Parliament.” • Second, the above average monsoon disrupted sectors like
mining, construction, and, to some extent, manufacturing.
About Economic Survey: • Third, the variation in the timing of festivities between
• Economic Survey 2024-25 tabled by Union Minister of September and October in the previous and current years led
Finance and Corporate Affairs in the Parliament. to a modest growth slowdown in Q2 FY25.
• A document which provides a summary of the Indian • MSME sector:
economy's performance, government policies, and outlook • It has emerged as a highly vibrant sector of the Indian
for the upcoming nancial year. economy.
• Normally, presented by the government to Parliament ahead • To provide equity funding to MSMEs with the potential to scale
of the Union Budget. up, the government launched the Self-Reliant India Fund with
• Prepared by the Economic Division of the Department of a corpus of ₹50,000 crore.
Economic Affairs in the Finance Ministry under guidance of
the Chief Economic Adviser. Services Sector:
• It is not mentioned in the Constitution. • The services sector continues to perform well in FY25.
• India’s services export growth surged to 12.8 per cent during
Economic Growth & outlook April–November FY25, up from 5.7 per cent in FY24.
• Banking:
Global Slowdown: • The Survey observes that stability in the banking sector is
• Especially in Europe and parts of Asia, due to supply chain underscored by declining asset impairments, robust capital
disruptions and weak external demand. buffers, and strong operational performance.
• Despite global Slowdown, India has displayed steady • The gross non-performing assets (NPAs) in the banking
economic growth. India's real GDP growth of 6.4 per cent in system have declined to a 12-year low.
FY25 remains close to the decadal average. • The capital-to-risk-weighted assets ratio (CRAR) for
• IMF projects for the next ve years global growth to Schedule Commercial Banks stands at 16.7 per cent as of
average around 3.2 per cent over September 2024, well above the norm.
• Economic Survey expects the India’s overall real GDP growth
in FY26 to be between 6.3 and 6.8 per cent. Note: The Economic Survey states that growth process has been
ably supported by stability on fronts such as in ation, scal
• Demand side estimations :
health, and external sector balance.
• Private nal consumption expenditure at constant
prices is estimated to grow by 7.3 per cent, driven by a
rebound in rural demand. In ation
• Supply side Estimations:
• Real gross value added (GVA) is estimated to grow by • Retail headline in ation has softened to 4.9 per cent in April –
6.4 per cent. December 2024 from 5.4 per cent in FY24.
• Agriculture sector is expected to grow by 3.8 per cent • Food in ation, measured by the Consumer Food Price Index
in FY25. (CFPI), has increased from 7.5 per cent in FY24 to 8.4 per cent in
• Industrial sector is estimated to grow by 6.2 per cent in FY25 (April-December), primarily driven by vegetables and
FY25. pulses.
• Driven by construction activities and electricity, • India’s consumer price in ation will gradually align with the target
gas, water supply and other utility services of around 4 per cent in FY26 as per RBI and IMF.
• Services sector is expected to remain robust at 7.2 per
cent. Capital Expenditure
• Driven by healthy activity in nancial, real estate,
professional services etc. • Capital expenditure (capex), as a per cent of the total expenditure
of the union, has continuously improved from FY21 to FY24.
Performance of Sectors of Economy
Agriculture: Infrastructure:
• Agriculture growth remained steady in rst half of FY25, with • Railway connectivity, 2031 km of railway network was
Q2 recording a growth rate of 3.5 per cent. commissioned in 2024, 17 new pairs of Vande Bharat trains
• The total Kharif food grain production is estimated at were introduced.
1647.05 lakh metric tonnes (LMT) in 2024-25, higher by 5.7 per • Port capacity improved signi cantly in FY25, reduction in
cent compared to 2023-24 and 8.2 per cent higher than the average container turnaround time in major ports from 48.1
average food grain production in the past ve years. hours in FY24 to 30.4 hours.
• Healthy Kharif production supported by above-normal
monsoons, and an adequate reservoir level. Gross Tax Revenue
P.T.O
• Despite the gross tax revenue (GTR) increasing by 10.7 per
cent YoY during April-November 2024, the tax revenue retained
by the Union, net of devolution to the states, hardly increased,
says the Survey.
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 Health:
• In the total health expenditure between FY15 and FY22, share of
government health expenditure has increased from 30 per cent to 48
UNDERSTAND UPSC per cent.
• During the same period, the share of out-of-pocket expenditure in
Balance of Payments total health expenditure declined from 62 per cent to 39 per cent.

• External sector stability is safeguarded by services trade Ef ciency

and record remittances.
• India was the top recipient of remittances in the world, • Survey, says that reducing excessive regulatory burdens,
driven by an uptick in job creation in OECD economies. governments can help businesses become more ef cient, reduce
• The above two factors combined to ensure that India’s costs, and unlock new growth opportunities.
current account de cit (CAD) remains relatively contained • It has outlined a three-step process for states to systematically
at 1.2 per cent of GDP. review regulations for their cost-effectiveness.
• Gross Foreign Direct Investment in ows recorded a • Identifying areas for deregulation.
revival in FY25 marking USD 55.6 billion. • Thoughtfully comparing the regulations with other states and
• Foreign portfolio investment (FPI) ows have been volatile countries.
in the second half of 2024, primarily on account of global • Estimating the cost of each of these regulations on individual
geopolitical and monetary policy developments. enterprises.
• India’s foreign exchange reserves increased to USD 634.6 • The Survey highlights that Ease of Doing Business (EoDB) 2.0
billion as of January 2025. suf cient to cover 90 per cent of should be a state government-led initiative focused on xing the root
external debt and provide an import cover of more than ten causes behind the unease of doing business.
months, thereby safeguarding against external vulnerabilities.
1 FEB 2025

Employment

• Good performance on the employment front.

• Unemployment rate has steadily declined for individuals ENVIRONMENT
aged 15 years and above from 6 per cent in 2017-18 to 3.2 PRE-CONTEXT
per cent in 2023-24.
MICROPLASTICS
• Labour force participation rate (LFPR) and the worker-to-
THE HINDU, PG.NO: 1.
population ratio (WPR) have also increased.
• Survey Suggest:
News: “Study nds microplastics in city’s groundwater’.”
• Adoption of AI offers the potential to support economic
growth and improve labour market outcomes.
Delhi government has detected microplastics in groundwater
• Prioritising education and skill development crucial for
surviving in AI-augmented landscape. samples across the Capital.
• Collaborative effort between government, private sector,
and academia to minimise the adverse societal effects of AI- Microplastics:
driven transformation in the labour sector. • Microplastics are small particles or fragments of plastic less than 5
mm in diameter—UNEP.
Renewable Energy • There is no standard or safe limit for microplastics.
• Groundwater has been polluted with micro-plastics due to leaching
effect from the river.
• India’s efforts to boost renewable energy in the country
• Microplastics can also absorb other chemicals and become
and green investments through schemes, policies, nancial
more toxic.
incentives and regulatory measures such as:
• Sources: Cosmetics, textiles, shing gear, industrial abrasives, tire
• PM - Surya Ghar Muft Bijli Yojana, National Bioenergy
wear.
Programme, National Green Hydrogen Mission and PM-
KUSUM.
Microplastics Consequences:
• The capacity addition in solar and wind power has lead to a
• Threatens FoodWeb (Bioaccumulation).
15 per cent year-on-year increase in renewable energy
• Potential to breach of Blood Brain Barrier.
capacity in 2024.
• Especially in woman: changes to human genetics, brain
• India should not shut coal plants without ‘alternatives’:
development, and respiration rates.
Survey.
• They have been found in various human organs, and even in the
Social Sector
placenta of newborns.

The Government social services expenditure has witnessed an Global & India initiatives:
increase of compounded annual growth rate of 15% from FY 21 • Basel Convention: Regulates transboundary plastic waste
to FY 25. (amended 2019).
• EU Single-Use Plastics Directive: Bans speci c items, promotes
Poverty: recycling.
• The Gini coef cient, which is a measure of inequality in
consumption expenditure, has been declining in recent years • India:
re ecting positive impact of Government’s initiatives in • Plastic Waste Management Rules (2016, amended): Phasing
reshaping income distribution. out single-use plastics (2022 ban), Extended Producer
School education: Responsibility (EPR).
• The government is working toward meeting the objectives of • Swachh Bharat Mission: Includes plastic waste management.
National Education Policy 2020 through a range of 1 FEB 2025
programmes and schemes: Samagra Shiksha Abhiyan,
DIKSHA, STARS, PARAKH, PM SHRI, ULLAS, PM POSHAN,
etc, as per the Survey.
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UNDERSTAND UPSC

Thank you!