Economic Survey 2025-26: Growth Rate Projected at 7.2% for FY27; Maintains Cautious Tone

The Economic Survey projects India’s growth to range between 6.8% and 7.2% for the 2026–27 financial year, while maintaining a cautious tone amid an evolving global landscape. The Survey was tabled in Parliament today by Union Finance Minister Nirmala Sitharaman. Chief Economic Advisor V Anantha Nageswaran is expected to address the media shortly to detail the report’s assessment of India’s fiscal health.

“The cumulative impact of policy reforms over recent years appears to have lifted the economy’s medium-term growth potential closer to 7%,” the Survey said. “With domestic drivers playing a dominant role and macroeconomic stability well anchored, the balance of risks around growth remains broadly even. The outlook, therefore, is one of steady growth amid global uncertainty, requiring caution but not pessimism.”

For the financial year ending March 31, the Indian economy is estimated to have grown 7.4%, according to the First Advance Estimates released by the National Statistical Office. The Reserve Bank of India, in its latest projections, has revised its FY26 growth estimate upward to 7.3%.

Driven by strong domestic demand, a rising share of private final consumption in GDP, and resilient growth in the first half of FY26, the economy continues to show momentum in the current financial year, the Survey said. “This is the fastest growth rate since the first half of FY23 and remains higher than the pre-COVID trend of 6.9%,” it noted. The Survey also cited a supportive macroeconomic environment—including benign inflation, a stable labour market, and rising purchasing power—as key factors underpinning domestic economic resilience.

 Historically, India has often recorded higher-than-projected growth compared with the estimates outlined in the Economic Survey. For instance, in FY24 the Indian economy expanded 9.2%, well above the expectations of 6.3-6.8%.

2026: Strategic Sobriety over Defensive Pessimism

The Economic Survey notes that the past year has been marked by strong growth, supported by robust macroeconomic fundamentals. Easing monetary conditions, fiscal measures involving significant changes to the tax framework, and the adoption of new labour codes helped drive domestic growth in 2025 despite a turbulent external environment. However, the Survey cautions that evolving geopolitical tensions and trade policy uncertainty could weigh on the outlook as political and economic disruptions persist.

The Economic Survey outlines three global scenarios that could shape India’s outlook in 2026.

The first, and most likely, is a “business-as-in-2025” scenario, which the report assigns a 40–45% probability. Under this scenario, the global environment becomes increasingly fragile and insecure, leading to short-term volatility rather than systemic collapse. Such conditions, the Survey notes, would require more active government intervention to stabilise expectations.

The second scenario envisages a disorderly multipolar world, where geopolitical tensions intensify, strategic rivalries deepen, and collective security arrangements begin to fray. This could expose the global economy to economic and trade coercion, sanctions, and countermeasures, triggering supply-chain disruptions and financial stress. The Survey notes that this environment would push policy decisions towards greater nationalisation, forcing countries to confront sharper trade-offs between autonomy, growth, and stability. This scenario is assigned a 40% probability.

The remaining 10–20% probability reflects the risk of a systemic shock translating into financial, technological, and geopolitical stress. The Survey flags that the recent phase of highly leveraged investment in AI infrastructure has exposed business models dependent on optimistic execution timelines, narrow customer concentration, and long-duration capital commitments. A correction in this segment, it notes, would not derail technological adoption but could tighten financial conditions, trigger risk aversion, and spill over into broader capital markets. Such an outcome, potentially more severe than the 2008 global financial crisis, could result in sharp liquidity contraction, weakening capital flows, and a shift towards defensive economic responses.

“In all three scenarios, India is relatively better placed than most other countries due to its strong macroeconomic fundamentals,” the Survey said. “The appropriate stance for 2026 is therefore one of strategic sobriety rather than defensive pessimism.”

The Economic Survey 2025–26 calls for economic policies focused on ensuring supply stability, building resource buffers, and diversifying trade routes and payment systems. It emphasises that policy credibility, predictability, and administrative discipline must underpin economic decision-making to sustain growth momentum amid a rapidly evolving global landscape.

“The central theme of the survey is the paradox of macroeconomic strength and external vulnerability with growth, inflation control and fiscal consolidation has put India on sturdy footing," Rajeev Juneja, President, PHD Chamber of Commerce and Industry, said in a statement.