V. Anantha Nageswaran on the Economic Survey: A new order is forming before our eyes. We have a shot at shaping it.

The Survey of 2024-25 comes within a short span of six months from the last one, which was presented in July 2024. But the pace of change has been dizzying, whether in politics, economics, markets or technology. With so many deep shifts taking place in the political and policy landscapes, the Economic Survey has much to offer keen readers and followers of these economic and political developments.

Also Read: Can the Economic Survey smoothen our path to Viksit Bharat?

The great global election year of 2024 is behind us, although a few more are due this year. The policy changes that they entail are—and will be— unfolding. What will be the course of key interest rates that will guide real activity and inflation expectations? How will the energy transition progress? What will be the drivers of global growth? How will artificial intelligence change job markets? How will they affect global trade and investment flows? How should India respond to these uncertainties and accelerate economic growth while ensuring equity and inclusion? These were the critical questions on our minds while putting together this Survey.

Some questions have a shorter shelf-life, and others will be with us for some time. Our proposed answers will influence, illuminate and delineate our approaches to the more enduring challenges. The path ahead will require constrained optimization of limited resources to achieve maximum output, while also managing trade-offs between competing goals and policies. Navigating this complex landscape will require strategic foresight, adaptability and a willingness to make tough but necessary choices.

The domestic context for the forthcoming Economic Survey had become more complex than at the time of the previous two surveys. Portfolio and net foreign direct investment flows in 2024-25 have moderated. These have not posed any concern to financing India’s imports or the current account deficit, as the price of India’s crude oil basket declined in the course of the financial year. Remittances by non-resident Indians have also held up well.

Also Read: Mint Quick Edit | Celebrate remittances but cheapen them too

The stock market is off its peak, although it is above the level a year ago. High real rates of interest and macroprudential measures caused credit growth to slow. Economic growth slowed to 6% in the first half of the financial year. The second half will be better.

These near-term developments meld with the long-term challenges of managing an energy transition, bringing down the share of fossil fuels in the economy for a cleaner environment while ensuring affordable energy security. The issue confronting India in these pursuits is that dependence on imports for crude-oil supplies is replaced by dependence on imports from a single source for critical components, materials and minerals for renewable energy generation and e-mobility. 

Resolving these dilemmas—or in some cases trilemmas—will determine the economy’s long-term growth rate while imparting near-term dynamism. The Survey presents our thoughts on these issues.

Also Read: War, climate, & AI: World’s three big challenges of 2025

Any comprehensive survey of the economy must cover the private sector, a crucial pillar of nation-building. In their work, Trade Wars Are Class Wars, Matthew C. Klein and Michael Pettis highlight the example of how post-World War II Japan successfully transformed itself into a developed and industrialized country thanks to a clear recognition of the obligations of the government, the private sector and workers to each other.

Economic historian Peter Temin in his paper ‘Economic History and Economic Development: New Economic History in Retrospect and Prospect’ (NBER Working Paper 20107, May 2014) on the origins of the Industrial Revolution suggests that the shortage of workers caused by Black Death led to a rise in real wages and tipped the scale in favour of technology and capital-led growth in the labour-scarce West. Labour-rich societies like India have followed the same template.

However, social stability and long-term profitability rest on the private sector finding the right balance between capital deployment and labour employment. The Survey, in various places, delves into the obligations of the private sector.

As always, my team and I have immensely benefitted from conversations with experts, researchers, regulators and officials of various wings of the government at the Centre and states, learning from their understanding of unfolding domestic and global events. While data on many aspects of the economy that you would see in the Survey speak for themselves, we have also woven in perspectives and insights gathered from our interactions with diverse stakeholders.

Sound and fruitful policy initiatives in different sectors from across the country are presented. We hope that they are a source of inspiration. Many innovative and successful practices in the social sector presented in the Survey can become templates for government programmes at scale, especially in states.

The era of globalization that lasted around three decades from its beginnings in the 1980s is largely over. A new order is taking shape before our eyes. We have a shot at shaping it while thriving in the uncertain interregnum and beyond. It is our hope and belief that the Economic Survey will contribute to both these endeavours. Of course, you, dear reader, are a better judge.

These are the author’s personal views.

The author is chief economic advisor to the Government of India.