New Delhi:
The Economic Survey 2025–26, tabled in Parliament on January 29 ahead of the Union Budget, presents a picture of an Indian economy that remains resilient amid global uncertainty, while urging policymakers and businesses to proceed with caution rather than pessimism. Prepared by the Department of Economic Affairs under Chief Economic Adviser (CEA) V. Anantha Nageswaran, the document sets the tone for the government’s economic thinking going into FY27.

At its core, the Survey projects real GDP growth in the range of 6.8% to 7.2% for FY27, signalling steady momentum despite a challenging external environment marked by trade tensions, tariff pressures, and geopolitical risks.

Growth Outlook: Steady, but Not Without Risks

According to the Survey, India’s domestic economy is on a stable footing, supported by strong macro fundamentals. For FY26, growth is estimated at 7.4% as per the first advance estimates. Looking ahead, the government expects India to remain one of the fastest-growing major economies globally.

The Survey notes that while domestic drivers such as consumption resilience, public investment, and improving private investment intentions continue to support growth, global conditions remain fragile. Trade conflicts, particularly tariff-related disruptions, could weigh on exports and investor sentiment intermittently.

Importantly, the Survey introduces a nuanced stance: growth prospects are steady, but policymakers must maintain buffers and credibility. As the document puts it, the outlook requires “caution, but not pessimism.”

Inflation: At Historic Lows, With Firming Ahead

One of the most notable takeaways from the Economic Survey is the sharp moderation in inflation. Retail inflation has remained well below the Reserve Bank of India’s target of 4%, aided by food price corrections and improved supply conditions.

The RBI has estimated CPI inflation at 2% for FY26, with projections of 0.6% for the December quarter and 2.9% for the March quarter. While inflation is expected to firm up gradually in FY27, it is likely to remain within the targeted range.

Healthier balance sheets across households, firms, and banks, combined with controlled inflation, have helped preserve macroeconomic stability, the Survey notes.

Global Context: Headwinds Persist

The Survey flags a dim medium-term outlook for the global economy, citing modest growth, lingering geopolitical tensions, and risks related to global financial markets. It warns that if the much-hyped AI boom fails to deliver productivity gains, it could trigger corrections in asset markets.

Despite these risks, India’s economy has demonstrated resilience. Total exports, including goods and services, reached a record $825.3 billion in FY25, even as merchandise exports faced tariff-related pressures, particularly from the United States.

Investment, Reforms, and Deregulation

The Economic Survey places renewed emphasis on systematic deregulation as the next phase of reforms under what it calls Ease of Doing Business 2.0. It argues that small, targeted deregulation efforts can trigger a “butterfly effect”, leading to entrepreneurship, investment, and innovation.

Public capital expenditure continues to play a critical role, with Centre-led infrastructure spending acting as a key growth driver. At the same time, private investment intentions are improving, though the Survey stresses the need for regulatory certainty to translate intent into execution.

Social Sectors and Emerging Themes

Beyond macroeconomics, the Survey reviews progress across employment, health, education and agriculture. It reiterates the importance of skill development as services now account for over 55% of India’s Gross Value Added.

The document also raises concerns over excessive social media use among younger populations, suggesting that age-based access limits may need consideration.

On artificial intelligence, the Survey proposes the creation of an AI Economic Council to calibrate the pace of adoption and balance innovation with societal risks.

Setting the Stage for Budget 2026

Presented just days before the Union Budget, the Economic Survey serves as a crucial backdrop for upcoming fiscal decisions. It highlights FY26 as an “unusually challenging year,” but frames FY27 as a year of adjustment, where firms and households adapt to regulatory changes and global shifts.

In sum, the Economic Survey 2025–26 paints a picture of an economy that is resilient, reform-oriented and cautiously optimistic, positioning India to navigate uncertainty without losing growth momentum.