The Economic Survey 2025–26, tabled by the Government of India, presents a confident yet cautious assessment of India’s economic trajectory amid global uncertainty, geopolitical tensions and financial market volatility. While reaffirming India’s strong macroeconomic fundamentals, the Survey flags structural challenges relating to exports, currency stability, capital costs and global disruptions.
Below are 10 major highlights from the Survey that matter most for businesses, taxpayers, investors and policymakers:
1. India’s Growth Outlook Strong at Over 7% Despite Global Headwinds
The Survey projects real GDP growth at over 7%, revising India’s potential growth rate upward to 7.0%, supported by infrastructure expansion, strong domestic demand and structural reforms. India remains one of the fastest-growing major economies globally
2. Radical GST Overhaul Since 2017 Highlighted
The Survey notes that 2025 witnessed the most radical overhaul of the GST regime since its inception, aimed at improving compliance, reducing friction and enhancing revenue efficiency. This signals further policy stability for businesses and indirect tax administration
3. Gold Prices Surge Reflects Global Financial Stress
Gold prices rose sharply from USD 2,607 to over USD 5,100 per ounce by January 2026, reflecting geopolitical risk, weakening dollar expectations and global financial fragility. The Survey treats gold as a key indicator of global uncertainty rather than inflationary pressure.
4. Inflation “Tamed and Anchored”, Core Inflation Stable
Despite food price volatility, core inflation (excluding gold and silver) remains subdued, indicating improved supply-side conditions, better logistics and rising productive capacity. Inflation is expected to remain manageable going forward.
5. Fiscal Deficit Narrows, But State Finances Raise Concern
The Union Government achieved a fiscal deficit of 4.8% of GDP, better than the budgeted target, with a further reduction to 4.4% targeted for FY26. However, rising revenue deficits and unconditional cash transfers by States pose medium-term fiscal risks.
6. Rupee Undervalued Despite Strong Fundamentals
The Survey observes that the Indian rupee is “punching below its weight”, underperforming despite strong growth, healthy banks and low external liabilities. Dependence on foreign capital inflows remains a vulnerability in periods of global stress.
7. Services Exports Strong, But Manufacturing Still Key
While services exports continue to outperform merchandise exports, the Survey stresses that long-term currency stability and external resilience require strong manufacturing exports. Services alone cannot substitute for goods-based export ecosystems.
8. High Cost of Capital a Structural Challenge
India’s high borrowing costs are attributed not merely to interest rates but to persistent current account deficits, which force India to pay a global risk premium. Transforming India into a surplus-generating economy is identified as a long-term policy goal.
9. AI Boom Carries Financial Stability Risks
The Survey flags risks from highly leveraged global investments in AI infrastructure, warning that corrections in this segment could trigger cross-border financial stress, especially if combined with geopolitical shocks.
10. Strategic Resilience, Not Short-Term Fixes, Is the Way Forward
Calling for an “entrepreneurial state”, the Survey urges India to focus on deregulation, state capacity building, manufacturing competitiveness and strategic resilience rather than protectionism or quick policy fixes.
Conclusion
The Economic Survey 2025–26 paints a picture of an economy with strong momentum but rising global risks. With GST reforms, fiscal consolidation, controlled inflation and robust growth, India is well-placed—but sustaining this trajectory will require export competitiveness, capital discipline and institutional agility.
