Economic survey projects up to 7.2% growth, inflation under control
New Delhi | Desk: Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2025-26 in Parliament. The survey was prepared by the Economic Division of the Department of Economic Affairs, Ministry of Finance, under the supervision of Chief Economic Advisor V. Anantha Nageswaran. The survey assesses India's current economic situation, future direction, growth prospects, inflation, employment, financial stability, and the progress of reforms.
According to the Economic Survey, India's economic growth momentum remains strong. The country's real GDP growth rate is projected to be between 6.8 and 7.2 percent in 2026-27, slightly lower than the estimated 7.4 percent in the current financial year. The first advance estimates for FY26 projected real GDP growth at 7.4 percent and GVA growth at 7.3 percent.
The survey states that inflation is under control, and low core inflation indicates an improvement in supply-side conditions. Domestic inflation averaged 1.7 percent during April to December 2025.
However, the survey also points to a paradox. While the country's domestic economic situation is strong, vulnerabilities persist on the external front. A decline in foreign capital inflows and pressure on the currency are causes for concern. In 2025, the rupee was affected by a drying up of foreign capital and its performance was weak.
On the fiscal front, the government has maintained fiscal discipline. The fiscal deficit in FY25 was 4.8 percent of GDP, which is better than the budget estimate. A deficit target of 4.4 percent has been set for FY26.
The survey expresses concern about the financial condition of the states. Growing fiscal populism at the state level, rising revenue deficits, and unconditional cash transfers are impacting capital expenditure. This is now also affecting the central government's borrowing costs, as investors are evaluating the entire government finances together.
India's position in trade and the external sector has strengthened. India's share in global merchandise exports increased from 1 percent to 1.8 percent between 2005 and 2024.
The country's foreign exchange reserves rose to $701.4 billion as of January 16, 2026, equivalent to 11 months of imports and 94 percent of external debt.
Government capital expenditure has seen a significant increase, rising from ₹2.63 lakh crore in FY18 to ₹11.21 lakh crore in FY26 (budget estimates). Effective capital expenditure is projected at ₹15.48 lakh crore in FY26, highlighting infrastructure as a key driver of growth.
India's position in the field of innovation has also improved. India's ranking in the Global Innovation Index improved from 66th in 2019 to 38th in 2025.
Government revenue has also improved. Central government revenue receipts reached 9.2 percent of GDP in FY25.
Under the financial inclusion initiative, the Pradhan Mantri Jan Dhan Yojana has seen the opening of 55.02 crore bank accounts by March 2025, of which 36.63 crore accounts are in rural and semi-urban areas.
Food grain production in the agricultural sector has increased. Production in the agricultural year 2024-25 is estimated at 3577.3 lakh metric tons, which is 254.3 lakh metric tons more than the previous year.
India remains the world's largest recipient of remittances. Remittances reached $135.4 billion in FY25.
Under the Production Linked Incentive (PLI) schemes, over ₹2 lakh crore of actual investment has been attracted across 14 sectors. This has resulted in additional production/sales of over ₹18.7 lakh crore and the creation of over 12.6 lakh jobs.
Domestic capabilities have been boosted under the India Semiconductor Mission. Ten projects in this sector, involving investments of approximately ₹1.60 lakh crore, have progressed.
Significant progress has been made in infrastructure development. The length of high-speed corridors has increased from 550 kilometers in FY14 to 5,364 kilometers in FY26 (by December 2025). Additionally, 3,500 kilometers of new railway lines have been added in FY26.
Overall, the Economic Survey 2025-26 indicates that the Indian economy stands on a strong foundation, but vigilance is necessary regarding challenges such as external risks, the fiscal health of states, and global capital flows.
