Economic Survey: In global turmoil, India shows growth path

Finance Minister Nirmala Sitharaman today tabled the Economic Survey 2025-26 in Parliament, presenting a largely optimistic assessment of India's economy ahead of the Union Budget 2026-27.

The pre-Budget document, prepared under the guidance of Chief Economic Adviser V. Anantha Nageswaran, reaffirms India's position as the world's fastest-growing major economy for the fourth consecutive year. It highlights robust domestic demand, anchored macroeconomic stability, and the fruits of sustained reforms as key drivers.

Key Projections

Current fiscal year (FY26): Real GDP growth is placed at 7.4% (as per First Advance Estimates), with Gross Value Added (GVA) at 7.3%. Recent quarterly data showed acceleration, with Q2 FY26 recording 8.2% real GDP growth.
- Next fiscal year (FY27): The Survey projects real GDP growth in the range of 6.8% to 7.2%, describing the outlook as one of "steady growth amid global uncertainty" and calling for "caution, not pessimism."

The Survey revises India's medium-term potential growth rate upward to around 7.0% (from 6.5% estimated three years ago), crediting sustained capital expenditure, private investment revival, logistics improvements, greater formalisation of labour, skilling initiatives, digital public infrastructure, and regulatory simplification.

Inflation and Macro Stability

India recorded exceptionally low inflation in 2025, with headline CPI averaging 1.7% from April to December — the lowest since the CPI series began — largely due to subdued food prices. Core inflation (excluding gold and silver) was described as "well behaved." The Survey notes India achieved the largest reduction in headline inflation among major economies in 2025.

The government remains on track to meet its fiscal deficit target of 4.4% of GDP for FY26, with the primary deficit also narrowing, reflecting continued fiscal prudence.

Global Context

Chief Economic Adviser Nageswaran emphasized that global trade is no longer purely reciprocal or neutral, with geopolitics, security considerations, export controls, and competition for critical minerals shaping policies. He described “swadeshi" (self-reliance-focused approaches) as a legitimate instrument in such an environment.

The Survey also flagged structural challenges, including skill gaps in the AI era, while noting sharp expansion in digital connectivity and the role of domestic consumption and investment in anchoring growth.

Analysts and economists have largely welcomed the projections, with some private forecasts suggesting FY26 growth could even exceed official estimates and approach 7.5-8% in coming years if reforms continue and global conditions remain supportive.

The Economic Survey sets an upbeat yet measured tone for tomorrow's Budget, balancing strong fundamentals with awareness of external risks.