The Economic Survey 2024-25 estimated that India’s GDP growth for the financial year 2025-26 (FY26) is expected to be between 6.3 percent and 6.8 percent.
The Economic Survey was tabled in the Parliament by Union Finance Minister Nirmala Sitharaman on Friday.
Retail inflation
The survey said retail inflation in India has reduced from 5.4 percent in FY24 to 4.9 percent in FY25 (April-December), aided by various government initiatives and monetary policy measures.
The decline in retail inflation is primarily due to a decrease in core inflation by 0.9 percentage points between FY24 and FY25 (April-December), largely driven by core services inflation and a decrease in fuel price inflation, the survey said.
Economic Survey highlighted that the government’s administrative measures such as strengthening buffer stocks for essential food items, open market releases and efforts to ease imports during supply shortage have been crucial in stabilizing inflation.
Food inflation rate remains firm
The survey said that India’s food inflation rate has remained firm, driven by a few food items such as vegetables and pulses. Contribution of vegetables and pulses to the overall inflation stood at 32.3 percent in FY25 (April to December).
When these items are excluded, the average food inflation rate for FY25 (April-December) was 4.3 percent, which is 4.1 percent lower than the overall food inflation, the survey added.
The survey underlined that extreme weather conditions such as cyclones, heavy rains, floods, thunderstorms, hailstorms, and droughts impact vegetable production and prices.
These adverse weather conditions also present significant challenges to storage and transportation, resulting in temporary disruptions to the supply chain and causing an increase in vegetable prices, the survey added.
The survey stateed that the inflationary pressures in onion remained firm in FY24 and the current year, despite prompt measures by the government to contain prices due to constrained supply resulting from reduced production.
The survey said that the lower production in 2022-23 and 2023-24 has consequently led to inflationary pressures in onions for FY24 and FY25 (April-December).
The price pressures in tomatoes remained intermittently high since FY23 due to constrained supply.
Despite efforts by the government, tomato prices remained high due to its highly perishable nature and production concentrated in few states, the survey stated.
To increase the production of pulses, oilseeds, tomato and onion, focused research is needed to develop climate-resilient crop varieties, enhancing yield and reducing crop damage, the survey suggested.
Training of the farmers on best practices and high-frequency price monitoring data for essential food items to monitor price are other measures that the survey suggests.
The survey said that the deficient production of tur in 2022-23 and 2023-24 has indeed led to high price pressures in tur dal during FY24 and FY25 (April-December).
To ensure adequate supply, the government periodically imposes stock limits for tur and actively monitors through the stock disclosure portal, it said.
Despite challenges, RBI and the IMF project that India’s consumer price inflation will progressively align towards the inflation target of around 4 per cent in FY26, the survey noted.
RBI expects headline inflation to be 4.2 per cent in FY26. IMF has projected an inflation rate of 4.4 per cent in FY25 and 4.1 per cent in FY26 for India.
