The Economic Survey for FY26 is being presented today, ahead of the Union Budget 2026-27, which will be presented on February 1. The survey, traditionally a report card on India's economic performance, is increasingly viewed as a forward-looking document that offers bold ideas on growth, reforms, and fiscal priorities. Experts believe that the survey's insights into growth outlook, inflation, fiscal consolidation, and employment could significantly influence the Budget 2026 decisions related to taxation, spending, and reform measures.
Globally, the economic outlook remains clouded by trade tensions, fiscal strains, and persistent uncertainty. While the global economy has demonstrated resilience, growth is expected to slow to 2.7% in 2026, falling below 2025 levels and the pre-pandemic average. Subdued investment and structural headwinds are expected to weigh on momentum, despite easing inflation and monetary loosening. The report notes that a partial easing of trade tensions helped limit disruptions to international commerce. However, the impact of higher tariffs, coupled with elevated macroeconomic uncertainties, is expected to become more evident in 2026.
Global headline inflation is projected to decrease from 3.4% in 2025 to 3.1% in 2026. However, high prices continue to erode real incomes, especially for low-income households, with food, energy, and housing costs remaining major sources of pressure and inequality. Financial conditions have eased due to lower interest rates and improved market sentiment, but risks remain elevated, particularly in AI-related sectors, with high asset valuations and borrowing costs.
The Indian economy has demonstrated resilience despite global uncertainty. Inflation has largely remained within the Reserve Bank of India's (RBI) tolerance band of 4% ± 2%, and public capital expenditure, budgeted at over ₹11 lakh crore in FY25, continues to anchor growth. However, as global geopolitics disrupt trade flows, capital movement, and energy prices, India's ability to sustain consumption-led domestic growth will be critical for near- and medium-term economic stability.
Several sectors have specific expectations for the upcoming budget. The financial services sector is positioned to power the nation's next phase of growth, and the Budget could accelerate this transition through targeted policy support and competitive tax rules. Strengthening financial institutions, deepening markets, and improving digital and regulatory architecture will expand the economy's credit capacity, strengthen inclusion, and reinforce India's emergence as a global financial hub, creating the investment foundation needed for sustainable and long-term growth.
In terms of income tax expectations, key demands include raising the standard deduction, revising tax slabs under the new tax regime, and increasing limits under Section 80C for savings and Section 80D for health insurance. Investors are also seeking Long Term Capital Gains (LTCG) relief by raising the tax-free threshold, while homebuyers desire a higher home loan interest deduction under Section 24(b). Additionally, simplifying labor compliance and statutory reporting for start-ups is seen as a way to support entrepreneurship.
