India needs revitalization to maintain long term growth of over 6%: Report

ANI May 14, 2025 181 views

India's economy faces challenges in sustaining 6% long-term growth, warns a DSP NETRA report. The services sector, once a strong performer, has slowed post-pandemic, while agriculture continues to lag. Over-reliance on IT for recovery could be risky without diversification. Strategic reforms are needed to boost manufacturing and agriculture for resilient growth.

"The domestic economy needs a resilient, sizable, and steady growth engine to drive higher growth rates" – DSP NETRA Report
New Delhi, May 14: The Indian domestic economy requires strategic focus for sizeable and sustained long-term growth, according to a report by DSP NETRA.

Key Points

1

Services sector growth dropped from 7.7% to 5.2% post-pandemic

2

Agriculture struggles with stagnant sub-5% growth for decades

3

IT sector anchors recovery but over-reliance is risky

4

Manufacturing shows volatility with 7.9% peak in 2000-2010

"The domestic economy needs a resilient, sizable, and steady growth engine to drive higher growth rates," the report says.

The domestic economy finds itself in critical position, after facing a significant setback from the pandemic. The biggest drag on growth has come from the services sector, where contact-intensive sectors such as trade, hotels, and travel were hit hard. Although it saw a sharp revival, the overhang of weak consumption growth and a premature slowdown in wages and salary growth threatens the momentum in this segment.

According to the report, to achieve higher growth rates, India's domestic economy requires a resilient, sizable, and steady growth engine.

At the current growth rate, maintaining India's long-term Gross Value Added (GVA) growth trajectory of 6.1 per cent CAGR will be challenging says the report.

The report highlights the role of Information Technology and IT-enabled Services (IT&ES) sector in anchoring the post-pandemic recovery.

However, over-reliance on one single sector could be dangerous, and for India to achieve a diversified and resilient domestic economic engine is essential.The report reflects a mixed picture, with the services sector, a key driver of the economy, showing a noticeable moderation in the post-pandemic period (2020-2025) compared to previous years.

The services sector, which had been a consistent performer, has seen a dip in its growth rate in the 2020-2025 period. Specifically, the average annual GVA growth for the services sector, which stood at 7.7% during 2010-2020, has declined to 5.2% in the 2020-2025 period.

Experts attribute this slowdown in services growth to the impact of the COVID-19 pandemic, which severely affected contact-intensive industries such as hospitality, tourism, and transportation.

The sector of Agriculture, forestry, and fishing has consistently exhibited lower growth rates compared to the overall average.

The period 1990-2000 saw an average growth of 3.1%, which dipped further to 2.0% between 2000 and 2010 before recovering somewhat to 4.4% in 2010-2020. This highlights the persistent need for agricultural reforms and investments to enhance productivity and growth in this crucial sector.

However, within the Industry, manufacturing saw strong growth of 7.9% in 2000-2010, while construction experienced significant volatility of 9.4% in 2000-2010, then 4.9% in 2010-2020.

Reader Comments

R
Rahul K.
The report highlights what we all know - our economy needs more legs to stand on beyond just IT. Manufacturing and agriculture need serious policy attention. Make in India was a good start but implementation has been slow. We can't afford to lose momentum now!
P
Priya M.
As someone working in hospitality sector, I've seen firsthand how pandemic devastated our industry. Even now, many small hotels and restaurants are struggling. Government should provide more support to MSMEs in service sector - they employ so many Indians! 🏨
A
Amit S.
Why is agriculture growth still so low after all these years? We talk about digital India but forget that half our population depends on farming. Better irrigation, storage facilities and fair prices for farmers should be top priority. Jai Kisan!
S
Sanjana T.
The report misses one crucial point - we need to focus on skill development across sectors. IT can't employ everyone. We need vocational training programs that match industry requirements. Germany's dual education system could be a model for us.
V
Vikram J.
While the report is comprehensive, I disagree with the pessimistic tone. India has shown remarkable resilience post-pandemic. With proper reforms in labor laws and infrastructure push, we can definitely achieve 7%+ growth. Have faith in our economy! 💪
N
Neha P.
The construction sector volatility is concerning - it affects so many related industries and provides mass employment. We need stable policies and better financing options for real estate sector. Housing for all by 2022 didn't happen - let's set realistic targets.

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India economic growth GDP analysis DSP NETRA report services sector slowdown agriculture reforms IT sector