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The survey, conducted in December 2024, attributes this moderation to global headwinds, geopolitical tensions, and uneven recovery in advanced economies. Economists predict a modest revival in economic activity driven by increased public capital expenditure, festive season demand, and a normalisation of industrial activity after the monsoon.
The agricultural sector, including allied activities, is expected to expand by 3.6%, while the industrial and services sectors are projected to grow by 6.3% and 7.3%, respectively.
Inflation remains a key focus, with the Consumer Price Index (CPI) inflation rate for 2024-25 projected at 4.8%. This aligns with the Reserve Bank of India’s December 2024 forecast. Food inflation, which has strained household budgets over the past year, is expected to ease, offering relief to consumers and boosting rural demand. Lower interest rates, facilitated by the RBI’s monetary easing, are also expected to stimulate consumption.
Despite these positive signs, headwinds persist. Subdued private capital expenditure remains a concern, influenced by geopolitical uncertainties, uneven domestic demand, and oversupply from China. However, deleveraged corporate balance sheets and sustained capacity utilisation rates could gradually build momentum in private investment. The government’s continued focus on infrastructure development, including investments in roads, housing, and logistics, is expected to be a critical growth driver in 2025-26.
Globally, the economic outlook for 2025 is marked by cautious optimism. While inflation is softening across advanced and emerging economies, progress remains uneven. Geopolitical conflicts, particularly in the Middle East, pose risks to energy markets and global trade. The potential impact of policy changes under the new U.S. administration has also drawn attention, with concerns about trade disruptions, immigration norms, and fiscal imbalances. At the same time, India is poised to benefit from global supply chain diversification, particularly in sectors like electronics manufacturing and pharmaceuticals, as businesses seek alternatives to China.
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