India's Economic Survey for 2025-26, presented to Parliament today, projects a real GDP growth of 6.8% to 7.2% for fiscal year 2027 (FY27). This forecast comes even as the Chief Economic Advisor (CEA) acknowledges the likelihood of a revision to the base year for GDP calculation in February. The survey suggests the Indian economy is displaying resilience amidst global uncertainties.
The projected growth for FY27 is slightly lower than the 7.4% growth estimated for FY26. This FY26 growth exceeded the previous year's Economic Survey projection of 6.3% to 6.8%. The current projection is based on sustained domestic reforms, infrastructure expansion, and public investment. The government is prioritizing investment-led expansion over short-term stimulus, supported by strong domestic demand, rising public capital expenditure, and improving private investment sentiment. Macroeconomic stability has largely returned after global shocks, with moderating inflation and on-track fiscal consolidation.
CEA Dr. V Anantha Nageswaran stated that India has the potential to reach a 7.5% growth rate. He emphasized that India's growth numbers stand out compared to the rest of the world, describing India as an "oasis of economic performance". The IMF predicts growth of 7.3% for the year ending March 2026, while MOSPI estimates it at 7.4%. The IMF also forecasts growth of 6.4% for the next two years, 2026–27 and 2027–28.
The Economic Survey highlights that domestic demand continues to anchor growth in FY26. Private Final Consumption Expenditure (PFCE) has reached its highest share in GDP since FY12, standing at 61.5%. Gross Fixed Capital Formation (GFCF) is steady at 30.0% of GDP, supported by public capital expenditure and a revival in private investment.
The survey also indicates that the government achieved a fiscal deficit of 4.8% of GDP in FY25, against the budgeted 4.9%, and has set a target of 4.4% for FY26. This fulfills the promise made in 2021 to reduce the Union fiscal deficit by more than half from 9.2% in FY21.
Several factors contribute to the positive outlook. Public investment in infrastructure is expected to stimulate private investment and job creation. Manufacturing is expected to play a more significant role, aided by incentives, ease-of-doing-business reforms, and integration into global value chains. The recently signed EU FTA is expected to strengthen India's manufacturing competitiveness, export resilience, and strategic capacity. Ongoing trade talks with the US are expected to conclude this year.
The Economic Survey noted that the Indian rupee underperformed in 2025 amid drying foreign capital flows. The survey also touches upon the expansion of infrastructure, with the National Highway growing by about 60% from FY14 to FY26. Operational High-Speed Corridors have increased nearly tenfold during the same period. Gross non-performing asset ratios have declined to a multi-decade low.
The Economic Survey 2026 serves as a comprehensive review of India's economic performance, offering insights into the challenges and priorities that will shape the Union Budget. It emphasizes the importance of structural reforms for sustaining long-term growth while flagging employment generation and global uncertainties as continuing policy challenges.
