Economic Survey 2025: Focus On Sustainably Improving Medium-Term Growth, Say Brokerages

The Economic Survey for 2024-2025 was released recently, drawing attention from various brokerage firms. The report emphasizes the importance of making sustainable improvements to medium-term economic growth in India.

As the Finance Minister, Nirmala Sitharaman, prepares to present the budget for 2025, scheduled for February 1, analysts are keen to see how the insights from this survey will influence fiscal policies.

Morgan Stanley Insights

Morgan Stanley highlighted the Economic Survey's call for necessary reforms and policy implementations by the government. They anticipate a cautious approach to fiscal consolidation in the upcoming budget, emphasizing capital expenditure as a vehicle for enhancing growth potential.

This brokerage predicts a fiscal deficit of 4.5% of GDP for FY26, with capital expenditures increasing at a rate faster than revenue expenditures. Moreover, Morgan Stanley believes that while the basic economic fundamentals appear solid, there are external risks that could affect the growth trajectory.

Macquarie's Perspective

Macquarie has a slightly pessimistic view, projecting a modest GDP growth of 6.3% to 6.8% for FY26. They acknowledge potential upsides due to domestic investments and output growth but caution about significant external threats.

They stress the need for deregulation across numerous sectors, particularly small and medium enterprises (SMEs), to foster higher sustainable growth. Additionally, Macquarie highlights the importance of job creation and developing skills to adapt to the evolving job market shaped by artificial intelligence.

Kotak Securities Comments

Kotak Securities echoed the Economic Survey's appeals for deregulation and systemic reforms to help India become more competitive and innovative. They concur with the GDP growth estimate of 6.3% to 6.8% for FY26 and reinforce the need for easing excessive regulations to stimulate economic momentum.

While acknowledging that inflation rates are decreasing, Kotak Securities pointed out possible risks from extreme weather changes and international commodity pricing. They also stress the need to improve export competitiveness and attract foreign investments.

Overall, brokerages are united in emphasizing the requirement for deregulation and targeted reforms to achieve sustainable economic progress. They agree that a careful approach to fiscal policy, with a focus on capital investment, is vital for navigating global challenges and reinforcing domestic economic fundamentals.

This Economic Survey lays out a framework for the forthcoming budget, with brokerages aligning their expectations on the necessity of growth strategies and the implementation of critical policy reforms necessary to fulfill long-term economic objectives.

Economic, Growth, Reform