India’s Economic Survey 2025–26, tabled in Parliament on Thursday by Finance Minister Nirmala Sitharaman, projects the economy to expand at 6.8–7.2 per cent in fiscal year 2026–27 (FY27), a slight moderation from the 7.4 per cent growth estimated for the current fiscal (FY26).
The survey, authored by Chief Economic Adviser V Anantha Nageswaran and a team from the finance ministry, underscores that strong domestic demand and resilient consumption are key growth drivers, even as geopolitical risks, weak exports and capital uncertainties cloud the external outlook.
Officials have highlighted structural reforms, anchored macroeconomic stability, and MSME sector dynamics as central to India’s growth narrative. With mixed indicators such as rising investment alongside global volatility, policymakers are emphasising “caution, but not pessimism” in navigating the year ahead.
Economic Survey maps cautious yet stable economic path
The Economic Survey 2025–26, presented on the eve of India’s Union Budget, projected that India’s real GDP growth will moderate to between 6.8 and 7.2 per cent in FY27, compared with an expected 7.4 per cent expansion in FY26.
The report noted that sustained domestic demand, robust private consumption, and improving investment activity have supported economic momentum, even as global demand softness and tighter financial conditions pose external headwinds.
Chief Economic Adviser V Anantha Nageswaran, speaking at a press briefing after the survey’s tabling, stressed confidence in the growth projection, pointing to easing inflation and expanding investment as positive signals.
He noted that real gross fixed capital formation a key measure of investment has grown sharply, illustrating renewed confidence among businesses to expand capacity and capital spending. The survey underscored that despite an upcoming base year revision that may tweak statistical measures, India’s underlying domestic strength remains solid.
The survey also reaffirmed that the medium-term growth potential of the Indian economy has risen to approximately 7 per cent, reflecting the cumulative impact of structural policy reforms in recent years, including tax administration improvements and labour law adjustments. Officials said such reforms have fortified India’s macroeconomic foundations, providing room for manoeuvre even in an uncertain global environment.
Global headwinds, structural reforms and the MSME narrative
While the growth outlook remains positive, the Survey highlighted several structural and external challenges that demand policymakers’ attention. It pointed to persistent global volatility, geopolitical tensions, and uneven demand for Indian exports as potential drags on growth.
India’s export sectors, in particular, continue to grapple with tariff barriers and trade uncertainties, prompting calls for renewed emphasis on diversifying trade partnerships and bolstering competitiveness a message echoed by several business analysts following the Survey’s release.
Simultaneously, the Survey placed renewed emphasis on capital market reforms as a means to reduce the cost of capital, recommending incentives such as lower taxation on debt instruments to attract long-term investment. Currently, high personal income tax rates on debt products make them less attractive compared to equities, posing hurdles for developing deeper financing alternatives outside traditional banking channels. The survey’s authors suggested tax rationalisation and regulatory updates to improve liquidity and support infrastructure financing.
Another central theme of the Economic Survey was the role of Micro, Small and Medium Enterprises (MSMEs) in the broader economic ecosystem. MSMEs contribute significantly to India’s manufacturing output, exports, and employment, making them a vital component of growth and resilience.
The Survey highlighted that nearly 35.4 per cent of manufacturing output and nearly half of total exports stem from the MSME segment, employing over 328 million people nationwide making it second only to agriculture in employment generation.
The Survey’s insights align with recent government initiatives to strengthen MSME financing, including expanded access to guaranteed credit schemes and enhanced credit products for micro-enterprises, buoyed by measures in the recent Union Budget aimed at improving liquidity and support for small business growth.
These interventions aim to ensure that MSMEs can play a stronger role in supply chains, investment growth and employment generation, especially as larger firms adjust to slower global demand.
The Logical Indian’s Perspective
The Economic Survey’s message one of steady growth amid persistent risk is a reminder that policymaking must balance optimism with realism. India’s robust domestic demand and investment recovery offer grounds for confidence, yet global uncertainties and structural gaps in finance and export competitiveness underscore the work still required. For citizens, particularly those dependent on small businesses and informal sectors, economic resilience must translate into visible improvements in job security, inflation relief and equitable access to credit.
At this juncture, India’s path ahead should prioritise inclusive growth strategies that support vulnerable sections of society, while also enhancing the competitiveness of its MSMEs and capital markets. The Survey’s findings provide rich material for constructive public dialogue, but such discussions must not only interpret numbers they must also reflect the lived experiences of ordinary people navigating the shifting economic landscape.
