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According to last year’s survey, India’s measured response to the pandemic on the economic front comprised three key elements. The first was a focus on public spending on infrastructure, which helped sustain the economy by creating demand for jobs and industrial output, while also triggering a delayed yet strong private investment response. The financial and non-financial private sectors benefitted from stronger balance sheets, supported by a decade of initiatives from the Government and the Reserve Bank of India.
The second key element was the digitalisation of service delivery, a response that emerged naturally from both businesses and public administration during times of adversity. Public policy and efforts to nurture digital technology played a significant role in facilitating this irreversible and transformational change.
The third component was the Atmanirbhar Bharat Abhiyan, which provided targeted relief to various sectors of the economy and sections of the population. Structural reforms under this initiative assisted in the recovery process and enhanced medium-term growth potential. While global challenges, supply chain disruptions, and fluctuating monsoon patterns contributed to domestic inflationary pressures, these were largely managed through administrative and monetary policy actions. The fiscal balances of both the central and state governments improved progressively, even amid expansionary public investment. Tax compliance, driven by procedural reforms, expenditure restraint, and increasing digitisation, helped maintain this balance.
On the external front, subdued global demand for goods put pressure on the external balance, but strong services exports largely offset this. Global output has become more resilient compared to 2022, inflationary pressures are decreasing, and trade is expected to recover, provided there are no further geopolitical disruptions. However, recent geopolitical tensions have heightened the likelihood of disturbances.
Overall, these developments contributed to India’s orderly recovery and expansion over the past three years. Real GDP in FY24 was 20% higher than in FY20, a milestone achieved by few major economies. This sets the stage for strong growth in FY25 and beyond. The growth has been inclusive, with reductions in unemployment and multi-dimensional poverty, alongside an increase in labor force participation. As a result, the Indian economy looks ahead to FY25 with optimism, expecting broad-based and inclusive growth.
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