The Economic Survey 2024-25 emphasizes that sustained growth requires both economic reforms and human capital investment, with a strong focus on education and healthcare

Key Highlights of Economic Survey

• Pillars: The Economic Survey 2024-25 highlights four crucial pillars for economic growth:
  • Deregulation
  • Private Participation
  • Augmenting Capabilities
  • Energy Transition
• Investment: However, for these pillars to be effective, investment in human capital (education and health) is essential.

Challenges in achieving Economic Growth

• Low Educational Attainment: 90.2% of the workforce has only a secondary-level education or lower. 88.2% of the workforce is engaged in low-competency jobs, limiting income growth.
• Job Market and Wages: Corporate profits grew by 22.3% in FY24, but employment increased only by 1.5%. 
  • Employee expenses fell from 17% in FY23 to 13% in FY24, signaling a focus on cost-cutting over workforce expansion. This reflects low productivity and the urgent need for upskilling.
• Inadequate Investment: Various government programs focus on vocational and entrepreneurial skills. Investment in education and health remains low compared to BRICS peers.
  • For FY25, the budget allocations include ₹9.2 lakh crore for Education (4.98% of GDP) and ₹3.2 lakh crore for Health (3.33% of GDP). 
  • With a population of 144 crore, the per capita expenditure remains inadequate.
• Fiscal Constraints: 35-40% of government revenue goes towards interest payments subsidies, and defense.
• High Fiscal Deficit: With a high fiscal deficit, spending on crucial sectors like education and health remains limited, as Interest Payments account for 20%, Subsidies for 6%, and Defense for 8% of the 2025-26 Budget.
• Low Tax Revenue: The decision to exempt income up to ₹12 lakh from taxes contradicts the goal of increasing human capital investment.

Need of Investment in Education and Health

• Skill Development: Skill creation starts at the school level. Government schools (serving 12 crore students with 50 lakh teachers) lack infrastructure and quality. 
• Lack of Digital Access: During COVID-19, rural students suffered due to lack of digital access. Need for IT infrastructure and teacher training to prepare for AI-driven jobs.
• Higher Education Reforms: India has 4.33 crore students in higher education. Investment in new IITs and IIMs is not enough—focus needed on research and skill-based learning. 
  • Large disparities exist between top-tier and second-tier institutions.
• Healthcare Investment: Public healthcare needs more funding for effective implementation of schemes and emergency preparedness. 
• Coordination: Centre-State coordination is crucial for better outcomes. Budget tax reliefs should not come at the cost of health and education spending.

Conclusion

Growth driven by deregulation and private investment must be supported by strong human capital. Investment in education and healthcare is critical to sustaining economic momentum. States should be incentivized to increase spending in these crucial sectors.