The Economic Survey 2025–26, tabled in Parliament by Finance Minister Nirmala Sitharaman ahead of the Union Budget, offers a comprehensive snapshot of India’s economic performance and lays out the policy challenges and priorities for the coming year. Prepared by the Department of Economic Affairs under the leadership of Chief Economic Adviser (CEA) V Anantha Nageswaran, the Survey assesses domestic growth drivers while flagging global risks that could shape India’s economic trajectory.
Growth Outlook
The Survey projects real GDP growth of 7.4% in FY26, supported by robust private consumption and investment. It notes that India’s growth story is unfolding at the intersection of global uncertainty and strong domestic fundamentals, with reforms and prudent fiscal policy playing a critical role in sustaining momentum.
Inflation and Macroeconomic Stability
Headline consumer price inflation eased sharply to 1.7% in FY26 (up to December), while core inflation excluding gold and silver moderated to 2.9%. The survey highlights softer underlying price pressures and improved macroeconomic stability, even as global financial conditions remain tight.
Rupee Movement Linked to Global Factors
Addressing concerns over currency depreciation, the survey underlines that recent weakness in the rupee reflects global uncertainty and capital flow dynamics rather than domestic macroeconomic stress. As an emerging market and capital importer, India remains sensitive to shifts in global risk sentiment, particularly portfolio investment flows.
Manufacturing
The survey stresses that long-term strengthening of the rupee will depend on building manufacturing capabilities. Drawing lessons from successful industrialising economies, it notes that manufacturing-led export growth typically precedes improvements in current account balances, foreign exchange reserves and currency credibility, with services exports playing a supporting role.
Swadeshi
The concept of Swadeshi, the survey argues, has evolved from self-reliance to strategic resilience and strategic indispensability. In a world where trade is increasingly shaped by geopolitics, tariffs, export controls and carbon border measures, Swadeshi is positioned as a policy instrument rather than an ideological choice.
Global Financial Risks and Market Fragility
The survey flags risks in global financial markets, warning that asset valuations may not fully reflect real-world economic uncertainty built up during years of easy monetary policy. It highlights elevated equity valuations, rising concentration among large global firms and the rapid expansion of financial assets as potential triggers for market volatility.
Energy Transition and Resource Constraints
India’s energy transition, the Survey notes, is not just about adding renewable capacity but also about managing heavy material and logistics requirements. It outlines the significant resource intensity of solar and wind power and estimates that India will need around 411 GWh of energy storage by 2031–32, underscoring the need for domestic manufacturing and supply-chain preparedness.
AI and Skilling Challenges
The survey identifies major skilling and structural challenges as artificial intelligence adoption accelerates. Employers place higher value on foundational and soft skills such as adaptability, teamwork and self-efficacy than on narrow technical skills. It also flags labour shortages in sectors like healthcare, eldercare, education, environmental restoration and advanced manufacturing.
Digital Expansion and Connectivity Gains
India has seen a dramatic expansion in digital infrastructure over the past decade. Data costs have fallen sharply, broadband subscribers have surged, and approval timelines for telecom infrastructure have been significantly reduced. Rural connectivity has also improved, with thousands of villages now connected to 4G and broadband services.
Mental Health and Digital Addiction
The survey also raises concerns over rising digital addiction, particularly among young people. Citing education data, it notes that social media use far outweighs educational usage among adolescents, with potential links to anxiety and depressive symptoms. Some states are exploring measures to address excessive screen time and its mental health impact.
Agriculture
Livestock and fisheries have emerged as faster-growing segments within agriculture, outperforming crops in recent years. However, the survey points to structural challenges such as imbalanced fertiliser use, excess foodgrain stocks, distorted incentives and weak value chains that continue to limit diversification.
Fiscal Position and State-Level Risks
Public finances are on a firmer footing, with the fiscal deficit projected to decline to 4.4% of GDP in FY26 and tax revenues strengthening post-pandemic. However, the survey cautions that rising state-level deficits could pose risks to long-term fiscal sustainability and increase borrowing costs if not addressed.
Inclusive Growth
The survey highlights broad-based and inclusive growth, citing improvements in housing, water access, healthcare coverage, education outcomes and property ownership. Millions of households have gained access to basic services, reinforcing the link between economic growth and social development.
