The government tabled the Economic Survey 2025-26 in Parliament as the formal preface to the Union Budget 2026-27, due on February 1. Presented by finance minister Nirmala Sitharaman, the Survey projects real GDP growth of 6.8–7.2% next year and places current-year growth at around 7.4%. The numbers matter less than the signal. In an unsettled global environment, the Survey positions India among the fastest-growing major economies, outperforming several advanced and emerging peers. That assessment is confident, and deliberately so.
The Survey anchors its optimism in signs of broad-based activity. Industrial output has accelerated, with December 2025 growth estimated at about 7.8%, the strongest in over two years. Manufacturing has led the rebound, suggesting that industry is again contributing meaningfully to aggregate growth rather than merely stabilising it.
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This recovery matters because it underpins private investment and job creation in ways consumption-led growth cannot. The Survey does not overstate the trend, but it is clear that industrial momentum has improved.
Inflation within bounds
The inflation outlook is presented with equal assurance. Despite currency pressures and volatile commodity markets, price levels are expected to remain within the Reserve Bank of India’s target band over the medium term. Food inflation has moderated, and underlying pressures remain contained.
While some commodity prices, particularly metals, may stay firm, the Survey’s judgment is that price stability will not be a binding constraint on growth. That assumption supports its broader investment narrative.
What the Survey treats more cautiously is the fiscal context within which this growth must be sustained. It reiterates the medium-term consolidation path, noting that general government debt remains elevated even as headline deficits narrow. Revenue buoyancy has improved, but the Survey flags limits to tax-led expansion without broader base widening and compliance gains.
Capital expenditure remains the preferred lever, yet the Survey implicitly acknowledges the trade-off between sustaining public investment and maintaining fiscal credibility as interest payments absorb a rising share of expenditure. Growth optimism, in other words, is conditional on disciplined fiscal execution rather than fiscal headroom.
Global risks remain unresolved
The Survey is less sanguine on the external environment. It flags persistent downside risks from geopolitical tensions, trade fragmentation, protectionist policies, and uncertainty around technological disruption. Weak global demand continues to limit external tailwinds.
For an economy increasingly integrated into global supply chains, these risks are not abstract. The Survey acknowledges the spillovers but does not attempt to quantify them, leaving that task to policymakers.
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Deregulation as growth policy
A recurring theme is deregulation. The Survey argues that simplifying compliance regimes and removing outdated restrictions across sectors such as manufacturing, labour, health, and education can unlock private investment.
This is consistent with the government’s broader ease-of-doing-business agenda. The Survey treats regulatory reform not as an auxiliary measure but as a central growth lever.
Labour markets: participation and precarity
Labour market constraints receive sharper attention. Women’s labour force participation remains limited, constrained by safety concerns, factory regulations, and workplace access. The Survey is explicit that removing these barriers would expand participation and strengthen inclusive growth.
It also flags the rapid expansion of gig and platform work. While employment opportunities have grown, earnings remain fragile. Around 40% of gig workers earn below ₹15,000 per month. The Survey stops short of prescribing solutions but signals the need for policy frameworks that address income stability and worker protection.
Agriculture and export potential
Agriculture continues to anchor rural demand despite its declining GDP share. Favourable monsoons and strong crop output have supported rural incomes. Within the sector, the Survey identifies floriculture as a high-value segment with export potential and superior returns per hectare compared to traditional crops.
The emphasis is selective rather than sweeping, reflecting a shift toward commercial viability rather than acreage expansion.
Trade diversification under pressure
On the external sector, the Survey acknowledges headwinds from global protectionism and tariff actions by major partners. Export competitiveness and investor sentiment have been affected.
India’s response has been to widen trade linkages. Ongoing and proposed free trade agreements with the EU, the UK, New Zealand, and Oman are presented as deliberate efforts to diversify markets and reduce concentration risks.
The external sector discussion also carries a quieter warning. While trade diversification through new FTAs is positioned as a strategic response to protectionism, the Survey notes that global trade volumes remain subdued and capital flows volatile. India’s current account position has stabilised, but remains sensitive to energy prices and services export momentum.
Portfolio flows continue to be episodic, reinforcing reliance on domestic demand to anchor growth. The Survey’s confidence rests less on external tailwinds than on insulation from them, a distinction that tempers expectations of export-led acceleration.
The Economic Survey 2025-26 presents an economy that has absorbed shocks and retained momentum. Its confidence rests on growth resilience, contained inflation, and reform-led investment.
What it also makes clear, without spelling it out, is that sustaining this trajectory will depend on execution: deregulation that delivers, labour reforms that expand participation without deepening precarity, and trade strategies that withstand a fragmenting global order.
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