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

The Economic Survey 2024-2025, released on Friday, has garnered significant attention from leading brokerages, highlighting the survey's emphasis on sustainably improving medium-term growth.

Morgan Stanley underscored the Economic Survey's call for reforms and policy steps that the government should implement. The budget will likely be guided by a gradual pace of fiscal consolidation, with a strong focus on capital expenditure and policy measures to enhance medium-term growth potential, according to the brokerage.

It expects the fiscal deficit to be pegged at 4.5% of GDP for FY26, with capex growth outpacing revenue expenditure growth.

"The survey highlights that the economic fundamentals remain robust, but the need to be watchful of risks from external factors," the brokerage noted.

Macquarie noted a muted recovery in growth for FY26E, with real GDP growth expected to be around 6.3-6.8%.

"Economic Survey released...expects just a muted recovery in growth over FY25E for FY26E, arguing that while there are many upsides to domestic investment, output growth and disinflation in FY26, there are equally strong, prominently extraneous, downsides too," Macquarie said.

It emphasised the importance of deregulation across various sectors, particularly for SMEs, to achieve higher sustainable growth. Macquarie also highlighted the need for job creation and skilling to prepare for an AI-driven world.

The brokerage observed mixed trends in the urban economy and a strong rural economy, with comfortable FX positions and deepening corporate bond markets.

Kotak Securities mentioned the Economic Survey's call for deregulation and reforms to push India towards a more competitive and innovative economy.

It pegs real GDP growth at 6.3-6.8% in FY26 and stressed the need for deregulation and economic freedom as catalysts for growth. Kotak Securities also noted that while inflation is easing, there are potential upside risks due to extreme weather events and international commodity prices. The brokerage emphasised on the importance of improving export competitiveness and attracting foreign investments.

"A pick-up in rural demand supported by a rebound in agriculture, easing food inflation, and a stable macro environment are positives for the near-term growth outlook. However, risks remain on account of significant global political and economic uncertainties," the brokerage noted.

Brokerages highlighted the need for deregulation and systemic reforms to drive sustainable medium-term growth. Moreover, a gradual pace of fiscal consolidation is seen as crucial, with a focus on capex to boost growth. Navigating global headwinds and reinforcing domestic fundamentals through strategic and prudent policy management is also emphasised.

The Economic Survey sets the stage for the upcoming budget, with brokerages aligning on the need for sustainable growth strategies and policy reforms to achieve long-term economic goals.