Introduction:

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, tabled the Economic Survey 2025–26 in Parliament, presenting a detailed assessment of India’s macroeconomic performance, sectoral trends, and medium-term policy priorities. The Survey comes at a time of heightened global uncertainty but underscores India’s emergence as a stable, fast-growing, and resilient economy.

Growth Amid Global Uncertainty:

• • • The global economic environment remains fragile, marked by geopolitical tensions, trade fragmentation, and financial vulnerabilities. While global growth has held up better than expected, risks remain elevated and their full impact may manifest with a lag.
    • Against this backdrop, India’s economic performance stands out strongly. According to the First Advance Estimates, India’s real GDP growth for FY26 is projected at 7.4 per cent, while Gross Value Added (GVA) growth is estimated at 7.3 per cent, making India the fastest-growing major economy for the fourth consecutive year.
    • Growth has been broad-based and demand-driven. Private Final Consumption Expenditure (PFCE) grew by 7.0 per cent in FY26, reaching 61.5 per cent of GDP, the highest share since 2012. Low inflation, stable employment, rising real incomes, and a strong agricultural performance supported rural demand, while tax rationalisation and improving labour market conditions strengthened urban consumption.
    • Investment activity also gathered momentum. Gross Fixed Capital Formation (GFCF) grew by 7.8 per cent, maintaining a healthy 30 per cent share of GDP. This was supported by sustained public capital expenditure and a revival in private investment, reflected in increased corporate announcements.
    • On the supply side, the services sector remained the primary growth engine, with GVA growth of 9.3 per cent in the first half of FY26 and an estimated 9.1 per cent for the full year. This highlights India’s increasing reliance on modern, tradable, and digitally delivered services.

Fiscal Consolidation and Monetary Stability:

• • • The Economic Survey highlights credible fiscal consolidation as a cornerstone of India’s macroeconomic stability. Prudent fiscal management has enhanced policy credibility and reinforced investor confidence, resulting in three sovereign credit rating upgrades in 2025 by Morningstar DBRS, S&P Global Ratings, and R&I.
    • The Centre’s revenue receipts improved structurally, rising from an average of 8.5 per cent of GDP during FY16–FY20 to 9.2 per cent in FY25. This was driven largely by buoyant non-corporate tax collections, reflecting better compliance and income growth. The number of income tax returns filed rose from 6.9 crore in FY22 to 9.2 crore in FY25, aided by technology-enabled tax administration.
    • GST collections remained robust, with gross collections of ₹17.4 lakh crore during April–December 2025, growing 6.7 per cent year-on-year. High-frequency indicators such as e-way bills also pointed to strong economic activity.
    • Public investment remained a key growth driver. The effective capital expenditure of the Centre rose to about 4 per cent of GDP in FY25, up from 2.7 per cent in the pre-pandemic period. Through the Special Assistance to States for Capital Expenditure, States were incentivised to sustain capital spending.
    • India also made progress on debt sustainability. The general government debt-to-GDP ratio declined by about 7.1 percentage points since 2020, even as public investment remained elevated, reflecting a careful balance between growth support and fiscal prudence.
    • On the monetary and financial front, India’s regulatory framework continued to strengthen. The banking sector’s asset quality improved significantly, with gross NPAs at 2.2 per cent and net NPAs at 0.5 per cent in September 2025—multi-decade lows. Credit growth accelerated to 14.5 per cent year-on-year by December 2025. International validation of regulatory quality came through the IMF–World Bank Financial Sector Assessment Program (FSAP), which noted India’s resilient and well-capitalised financial system.

External Sector and Inflation:

• • • The Survey highlights India’s steady integration into the global economy, even amid global slowdown. Between 2005 and 2024, India’s share in global merchandise exports nearly doubled, while its share in global services exports more than doubled.
    • In FY25, India’s total exports reached a record USD 825.3 billion, driven primarily by services exports. Services exports touched USD 387.6 billion, growing 13.6 per cent and reinforcing India’s position as a global hub for IT and business services. Non-petroleum exports also reached historic highs.
    • The current account deficit remained moderate, at around 1.3 per cent of GDP in Q2 FY26, supported by strong services exports and record remittances of USD 135.4 billion, making India the world’s largest recipient. Foreign exchange reserves rose to USD 701.4 billion by January 2026, providing import cover of nearly 11 months and enhancing external resilience.
    • Despite a subdued global investment climate, India attracted USD 64.7 billion in gross FDI during April–November 2025 and ranked fourth globally in Greenfield investment announcements in 2024.
    • Inflation emerged as a major macroeconomic success story. Average headline CPI inflation during April–December 2025 stood at 1.7 per cent, the lowest since the CPI series began. This moderation was driven by declining food and fuel prices. Among major emerging economies, India recorded one of the sharpest declines in inflation in 2025, anchoring macroeconomic stability and supporting consumption.

Sectoral Transformation: Agriculture, Industry, Services and Infrastructure:

• • • The Survey underscores structural transformation across sectors.
    • In agriculture, strong monsoon conditions lifted foodgrain production to 3,577.3 lakh metric tonnes in AY 2024–25, while horticulture production reached 362 million tonnes, surpassing foodgrains and emerging as a major growth driver. The livestock and fisheries sectors recorded robust long-term growth. Farmer incomes were supported through MSP, PM-KISAN transfers, and pension schemes, while digital platforms like e-NAM improved market access.
    • The industrial sector strengthened despite global headwinds. Manufacturing GVA growth accelerated sharply in FY26. Production Linked Incentive (PLI) schemes attracted over ₹2 lakh crore in investment, generated large-scale production, and created over 12 lakh jobs. India’s innovation capacity improved, reflected in its rise to 38th rank in the Global Innovation Index 2025. The India Semiconductor Mission advanced domestic manufacturing capabilities.
    • The services sector continued to dominate, accounting for over 53 per cent of GDP and 56 per cent of GVA, while attracting more than 80 per cent of FDI inflows in recent years.
    • Infrastructure investment remained central to India’s growth strategy. Government capital expenditure increased more than fourfold since FY18. Highways, railways, airports, power capacity, renewable energy, digital connectivity, water supply, and space infrastructure all expanded significantly, strengthening India’s long-term productive capacity and competitiveness.

Social Development and Employment:

• • • The Survey highlights progress in human development and inclusion. India operates one of the world’s largest school systems, with improving enrolment rates across levels. Higher education expanded rapidly, supported by National Education Policy reforms, flexible credit frameworks, and internationalisation.
    • Health outcomes improved markedly, with sharp declines in maternal, infant, and child mortality, far exceeding global averages. Employment indicators remained positive, with over 56 crore people employed in Q2 FY26, and labour reforms extending social security to gig and platform workers. The e-Shram portal strengthened coverage of unorganised workers, especially women.
    • Rural development initiatives, poverty reduction, and rising social services expenditure reinforced inclusive growth. Emerging themes such as AI adoption, urban connectivity through regional rapid transit systems, and a strategic shift from import substitution to strategic resilience and indispensability reflect India’s forward-looking policy vision.

Conclusion:

The Economic Survey 2025–26 presents a picture of an economy that has combined high growth with macroeconomic stability, deepened structural reforms, and strengthened resilience amid global uncertainty. With controlled inflation, robust public investment, expanding services, improving human development, and a strategic global outlook, India is well-positioned to sustain inclusive, resilient, and globally integrated growth in the years ahead.