Current Affairs - Economy

In February 2025, India's Index of Industrial Production (IIP) grew by just 2.9%, its weakest performance in six months. This slowdown was driven by broad-based sluggishness across mining, manufacturing, and electricity sectors, compounded by a high base effect from the previous year. While the consensus forecast by Reuters had predicted a 4% growth, the actual figure undershot expectations. Mining rose only 1.6%, manufacturing increased 2.9%, and electricity output was up by 3.6%. Among use-based categories, capital goods showed robust growth at 8.2%, but most other segments—including consumer non-durables—faltered, reflecting a cooling in industrial momentum.

The Asian Development Bank (ADB), in its April 2025 Asian Development Outlook report, has projected India's GDP to grow by 6.7% in the fiscal year 2025. This growth outlook reflects the economy's resilience amid global uncertainties, supported by rising domestic demand, rural income growth, and controlled inflation. Additional drivers include fiscal reforms such as tax cuts for the middle class and monetary easing through repo rate reductions. Despite a slight downward revision by the Reserve Bank of India (RBI) to 6.5%, the ADB maintains confidence in the momentum of India’s economic expansion into FY2026.

According to the Periodic Labour Force Survey (PLFS) 2024 released by the Ministry of Statistics and Programme Implementation, the unemployment rate for individuals aged 15 and above in India experienced a slight decline from 5.0% in 2023 to 4.9% in 2024. This marginal dip reflects a modest improvement in the national employment scenario, despite ongoing disparities across gender and regions. While rural unemployment decreased slightly, urban areas showed a mix of trends, with male unemployment rising and female unemployment falling. These nuanced shifts underscore the complexity of the labour market and the importance of continuous monitoring and policy responses.

China announced additional tariffs of 34% on U.S. goods as part of a serious escalation in the trade war between the world’s two largest economies. This was one of the most significant retaliatory actions taken by China in response to U.S. trade measures. In addition to the tariffs, China also imposed controls on the export of certain rare earth elements and filed a complaint with the World Trade Organization (WTO). These measures signal the depth of the economic standoff and the strategic importance both countries place on controlling trade dynamics.

Tamil Nadu recorded a real economic growth rate of 9.69% for the year 2024-25, the highest among all Indian states and the best for Tamil Nadu in the past decade. Real growth reflects the actual expansion of the economy by excluding the effects of inflation, offering a more accurate measure of performance. This impressive figure surpasses both expert predictions and previous years' growth rates, including 8.59% in 2017-18 and the minimal growth of 0.07% during the pandemic-hit year of 2020-21. It highlights Tamil Nadu's economic resilience and progress, supported by robust policy planning and sustained development efforts.