The Economic Survey 2025–26, tabled in Parliament ahead of the Union Budget, offers a data-driven assessment of India’s economic performance, macroeconomic stability, and structural transformation. Prepared by the Economic Division of the Department of Economic Affairs (DEA), the Survey acts as both a diagnostic document and a strategic blueprint, outlining how India can sustain high growth amid global uncertainty.

Growth Outlook: Sustained Momentum with Structural Strength

• A key highlight of the Survey is the upward revision of India’s growth outlook. Real GDP growth for FY26 has been revised to 7.3–7.4%, reflecting resilience in domestic demand and strong capital investment. Looking ahead, FY27 growth is projected at 6.8–7.2%, indicating confidence in India’s medium-term growth fundamentals.
• Quarterly data reinforce this optimism. Real GDP growth accelerated to 8.2% in Q2 FY26, up from 7.8% in Q1, underscoring the combined impact of robust consumption and infrastructure-led public spending. The Survey argues that India can maintain a growth rate close to 7% in the medium term, provided reform momentum continues and private investment strengthens alongside public capex.

Inflation and Monetary Policy: Stability with Caution

• On the inflation front, the Survey notes that retail inflation eased significantly in 2025, with projections suggesting alignment with the RBI’s 4% target. This moderation reflects prudent monetary policy, supply-side measures, and easing global commodity prices.
• The repo rate remained at 6.5% for much of the fiscal year, with a shift towards a neutral monetary stance, balancing growth needs with price stability. However, the Survey flags food inflation—particularly vegetables and pulses—as a persistent risk, often accounting for a large share of headline inflation. This underscores the need for reforms in agricultural supply chains, storage, and logistics rather than relying solely on monetary tools.

Sectoral Performance: Services Lead, Industry Consolidates

• Sector-wise, the services sector remains the primary engine of growth, expanding at around 7.2%, driven by financial services, real estate, tourism, and digital services. India’s strong position in global services trade further reinforces this dominance.
• The industrial sector is estimated to grow by 6.2%, supported by construction activity, electricity generation, and manufacturing incentives. The Survey highlights electronics manufacturing as a success story, noting that 99% of smartphones are now manufactured domestically by volume. However, it also stresses the need to enhance domestic value addition and technological depth.
• In agriculture, growth is expected to improve, aided by robust rural demand and a rebound in production, though climate variability remains a structural challenge.

External Sector: Resilience amid Global Volatility

• India’s external position remains comfortable. Foreign exchange reserves crossed USD 700 billion in September 2024, before stabilizing around USD 634–640 billion in early 2025–26, providing a strong buffer against external shocks.
• The Survey records a revival in FDI inflows, with gross FDI growing by 17.9% to USD 55.6 billion in the first eight months of FY25, a trend that continued into FY26. Remittances increased by 10.7% (year-on-year) in Q2 FY26, reinforcing external stability. Notably, India now ranks 7th globally in services exports, highlighting its growing role in the global economy.

Banking, Finance, and Market Strength

• The health of the banking sector stands out as a major achievement. Gross NPAs of Scheduled Commercial Banks fell to a 12-year low of 2.6% of gross loans (as of September 2024). Banks also maintained a strong Capital-to-Risk-Weighted Assets Ratio (CRAR) of 16.7%, indicating robust capital buffers.
• Capital markets remained buoyant, with resource mobilization from primary markets reaching ₹11.1 lakh crore between April and December 2024, reflecting investor confidence.

Employment and Social Sector: Toward Inclusive Growth

• On the social front, the unemployment rate declined to 4.7% in November 2025, the lowest since April 2025. Women’s participation improved, with their share in apprenticeships under the NAPS scheme rising to 22.8% in FY25.
• Digital inclusion deepened through the eShram portal, which registered over 30.5 crore unorganized workers by December 2024. Infrastructure delivery also improved, with 15.3 crore rural households gaining access to piped water under the Jal Jeevan Mission by November 2024.

Conclusion

The Economic Survey 2025–26 presents a picture of measured optimism backed by strong data. With resilient growth, improving financial stability, and expanding social coverage, India is well-positioned to sustain high growth. However, the Survey emphasizes that continued reforms, human capital investment, and macroeconomic prudence are essential to convert current momentum into long-term, inclusive prosperity.