India's Economic Survey 2026, tabled in Parliament on January 29, 2026, paints a picture of a robust and resilient economy, characterized by strong growth, thriving domestic demand, and well-managed inflation. The survey, which provides a comprehensive analysis of India's economic performance, also highlights the challenges and opportunities that lie ahead.
Key Growth Drivers
The Economic Survey 2026 projects a real GDP growth of 6.8% to 7.2% for FY27. The Indian economy is projected to grow at 6.3% in 2026 and 6.5% in 2027. The survey reaffirms India's position as the fastest-growing major economy in the world. This growth is underpinned by strong domestic demand, with Private Final Consumption Expenditure (PFCE) reaching its highest share in GDP since FY12, standing at 61.5%. A resilient investment cycle, with Gross Fixed Capital Formation (GFCF) steady at 30.0% of GDP, supported by record public capital expenditure and a revival in private investment, further fuels economic expansion. The survey has revised India's medium-term potential growth rate upward to 7.0%, driven by sustained domestic reforms, public investment, and infrastructure expansion. India's GDP growth for FY26 is estimated at 7.4% driven by consumption and investment.
Inflation Management
Headline inflation (CPI) declined to a low of 1.7% in April-December 2025, mainly due to a sharp drop in food prices. The survey notes that inflation management during this period benefitted from coordination between fiscal and monetary policy. Government interventions, including trade policy actions and improvements in supply-chain logistics, complemented monetary tightening and reduced pressure on interest rates. The Economic Survey 2026 predicts India's inflation will be higher in FY27 than FY26, but remains within the RBI's target. For FY26, headline inflation averaged 1.7%, with projections for FY27 at 4.0%. According to econometric models, the India Inflation Rate is projected to trend around 4.00 percent in 2027 and 4.10 percent in 2028.
Sectoral Performance
The industrial sector is showing signs of strength, with manufacturing growing by 8.4% in the first half of FY26. The gross value added for services increased by 9.3% in the first half of FY26. Agriculture and allied services are estimated to grow by 3.1% in FY26.
Fiscal Prudence
The government is on track to meet the fiscal deficit target of 4.4% of GDP for the current financial year. India received credit rating upgrades from S&P, Morningstar DBRS, and R&I, marking the first upgrade from a major agency in nearly two decades.
Global Headwinds and Rupee Depreciation
Despite the optimistic outlook, the Economic Survey 2026 acknowledges that the global economy remains dim over the medium term, with downside risks continuing to dominate. Geopolitical turbulence could become an enduring feature, disrupting capital flows and impacting the Rupee. The Rupee fell by 6.5% against the dollar between April 1, 2025, and January 22, 2026. The survey identifies the trade deficit, foreign portfolio investment (FPI), and market uncertainty due to tariffs and trade negotiations with the United States as key reasons for the Rupee depreciation.
Other Key Highlights
India's total trade deficit amounted to USD 94.7 billion in FY25. Total imports rose 7.4% year-on-year to USD 919.9 billion, reflecting steady domestic demand amid global uncertainty. India's total exports (merchandise and services) reached a record USD 825.3 billion in FY25. The gross non-performing asset ratios declined to a multi-decade low of 2.2%. The Economic Survey 2026 also points to a structural shift in India's household financial savings, with equities and market-linked instruments emerging as a growing component of household portfolios. The share of individuals in aggregate equity market ownership increased from about 11 per cent in FY14 to 18.8 per cent by September 2025.
In conclusion, the Economic Survey 2026 presents a positive assessment of the Indian economy, highlighting its robust growth, well-managed inflation, and strong domestic demand. While acknowledging the challenges posed by global uncertainties, the survey expresses cautious optimism about India's economic prospects.
