Why in news?

The Economic Survey for 2024-25, presented by Finance Minister Nirmala Sitharaman, provides a comprehensive analysis of India's economic performance and future outlook.

What’s in today’s article?

• Context of global economy
• Key highlights of Economic Survey 2024-25 (Part 2)

Context of global economy: The Economic Survey for 2024-25, presented by CEA V Anantha Nageswaran, highlights two major concerns:

• Global Economic Environment:
  • The Survey points out that the global economic environment has become more challenging.
  • Global trade and investment have slowed down, and trade dynamics have shifted from globalization to rising trade protectionism.
  • This change is contributing to increased uncertainty, with signs of secular stagnation in the global economy.
• China's Manufacturing Dominance:
  • China remains the world's manufacturing hub, producing one-third of all global output, more than the next 10 countries combined.
  • However, due to global economic fragmentation, the long-standing trend of outsourcing manufacturing to China is expected to undergo a reset.

Key highlights of Economic Survey 2024-25 (Part 2):

7. Industry: Driving Business Reforms

• Industrial Growth: Expected at 6.2% in FY25, driven by electricity and construction.
• Smart Manufacturing & Industry 4.0: Promoted through SAMARTH Udyog centres.
• Automobile Sales: Domestic sales grew by 12.5% in FY24.
• Electronics Production: Grew at 17.5% CAGR (FY15-FY24); 99% of smartphones made domestically.
• Pharmaceuticals: Turnover of ₹4.17 lakh crore in FY24, growing at 10.1% over five years.
• Patent Filings: India ranks 6th globally (WIPO Report 2022).
• MSME Sector: Emerged as vibrant; Self-Reliant India Fund launched with ₹50,000 crore corpus.
• Cluster Development: Micro and Small Enterprises-Cluster Development Programme for nationwide cluster growth.

8. Services: New Challenges for the Old War Horse

• Contribution to GVA: Service sector's share rose from 50.6% (FY14) to 55.3% (FY25).
• Growth Rate: Services grew at 8% pre-pandemic and 8.3% post-pandemic (FY23–FY25).
• Global Services Exports: India held 4.3% share in 2023, ranking 7th worldwide.
• Export Growth: Services exports surged 12.8% during April–November FY25.
• Information Services: Grew at 12.8% over the last decade, increasing share of GVA from 6.3% to 10.9%.
• Indian Railways: Passenger traffic grew 8% in FY24, while freight revenue grew by 5.2%.
• Tourism: Contributed 5% to GDP in FY23, returning to pre-pandemic levels.

9. Agriculture and Food Management: Sector of the Future

• Contribution to GDP: Agriculture and allied activities contribute 16% to India's GDP (FY24).
• Growth Drivers: High-value sectors like horticulture, livestock, and fisheries are key growth drivers.
• Kharif Foodgrain Production: Expected to reach 1647.05 LMT in 2024, an increase of 89.37 LMT from last year.
• MSP Increases: MSP for Arhar and Bajra raised by 59% and 77%, respectively, in FY24-25.
• Sector Growth: Fisheries grew at 8.7% CAGR, and livestock at 8% CAGR.
• Food Security Programs: PMGKAY and NFSA mark a shift in food security approach. Free food grains under PMGKAY extended for five years.
• Farmer Support: 11 crore farmers benefited under PM-KISAN, and 23.61 lakh enrolled in PM Kisan Mandhan.

10. Climate & Environment: Adaptation Matters

• Sustainable Development: India aims for developed nation status by 2047 with a focus on inclusive and sustainable growth.
• Non-Fossil Fuel Capacity: 46.8% of India's electricity generation comes from non-fossil fuels (2,13,701 MW capacity as of November 2024).
• Carbon Sink Creation: 2.29 billion tonnes CO2 equivalent additional carbon sink created from 2005 to 2024.
• LiFE Movement: India leads the Lifestyle for Environment (LiFE) initiative to promote sustainability.
• Global Impact of LiFE: By 2030, LiFE could save USD 440 billion globally through reduced consumption and lower prices.

11. Social Sector: Extending Reach and Driving Empowerment

• Expenditure Growth: Social services expenditure (Centre + States) grew at 15% CAGR from FY21 to FY25.
• Declining Inequality: Gini coefficient (measuring income inequality) declined in both rural (0.237 in FY24) and urban areas (0.284 in FY24), indicating reduced inequality.
• Government Health Expenditure: Health expenditure share increased from 29% to 48%, reducing out-of-pocket expenditure from 62.6% to 39.4%.
• Ayushman Bharat Impact: Over ₹1.25 lakh crore savings through the AB PM-JAY scheme, significantly reducing financial strain on households.
• Localization of SDGs: The Localisation of SDGs strategy aligns Gram Panchayat budgets with Sustainable Development Goals.

12. Employment and Skill Development: Existential Priorities

• Unemployment Decline: Unemployment dropped to 3.2% in 2023-24 (July-June) from 6.0% in 2017-18 (July-June).
• Youthful Demographics: 26% of India’s population is aged 10-24, positioning it as one of the youngest nations globally.
• Women’s Entrepreneurship: The government has launched initiatives to support women entrepreneurs with access to credit, marketing, skill development, and startup support.
• Job Creation: The digital economy and renewable energy sectors are crucial for job growth, aligning with the Viksit Bharat
• Skilled Workforce: The government is building a skilled ecosystem to adapt to global trends like automation, AI, digitalization, and climate change.
• PM-Internship Scheme: This initiative is acting as a transformative catalyst for employment generation.
• Formal Employment Growth: EPFO payroll additions have more than doubled in the past six years, signaling robust formal employment growth.

13. Labour in the AI Era: Crisis or Catalyst?

• AI Revolution: AI promises to automate valuable work, surpassing human performance in critical decision-making across sectors like healthcare, research, education, and finance.
• Barriers to AI Adoption: Challenges like reliability, resource inefficiencies, and infrastructure deficits hinder large-scale AI adoption, providing policymakers time to act.
• India's Advantage: As AI is in its early stages, India can strengthen its foundations and harness its young, tech-savvy population to integrate AI into the workforce, boosting productivity.
• Augmented Intelligence: The future lies in combining human and machine capabilities, enhancing human potential and improving job efficiency.
• Collaborative Effort: Governments, the private sector, and academia must work together to mitigate the societal impacts of AI-driven transformation.