Economic Survey 2024-25: Shift to Domestic-Led Growth
Why in the news
The Economic Survey 2024-25 acknowledged that global trade is slowing and protectionism is rising, so India is leaning on its own market for growth.
Key facts
- Barriers: tariff and non-tariff barriers touch 67.1% of global trade; 26.4% of shipments face climate-related trade limits.
- Trade fragmentation could lower world GDP by up to 7%; a Trump second term could speed up restrictions.
- Exports alone cannot deliver 8% GDP growth, so domestic demand matters more; shifting alliances may trim FDI into emerging economies.
- China: an earlier Survey urged opening up to Chinese FDI; the latest one dropped it, preferring stronger domestic supply chains even at higher cost.
Industrial policy
| Tool | Detail |
|---|---|
| Average tariff | 13.4% (2016) to 17% (2023) |
| PLI scheme | Launched 2020 for domestic manufacturing |
| Domestic content rules | Mandate local sourcing in projects |
- Policy is being revived with East Asian growth models in mind.
Reforms and investment
- Privatisation, labour flexibility and land acquisition get little mention; deregulation to cut bureaucracy is stressed, along with policy stability.
- Firms are in a ‘wait and watch’ mode; the government may need to exceed the planned 10.1% rise in FY26 capital expenditure.
Exam angle
- Term: geo-economic fragmentation (GEF).
- Theme: self-reliance, higher tariffs, PLI incentives, less China dependence.