Economic Survey 2025-26: FY27 growth pegged at 6.8–7.2%, outlook positive

Finance Minister Nirmala Sitharaman on Thursday tabled the Economic Survey 2025-26 in the Parliament, with the document flagging a steady growth trajectory for India even as it warns that global stability remains fragile and downside risks to world output are becoming harder to ignore.

The Survey pegs India’s FY27 GDP growth at 6.8% to 7.2%, indicating that expansion could stay close to trend levels next year. It also places India’s medium-term growth potential at around 7%, arguing that the economy has the capacity to hold that pace if reform momentum and investment strength continue.

Resilience of domestic demand

A key theme in the Survey is the resilience of domestic demand, which it sees staying firm through FY27. It also expects investment conditions to improve, pointing to stronger private capex intentions and signs of strengthening economic momentum in recent months, supported by structural reforms and policy measures.

The Survey projects that India is now looking at FY26 real growth of over 7%, and suggests that growth in FY27 could remain “at or near” the 7% mark, backed by demand stability and improving investment traction.

Global risks rising, but India’s buffers still intact

On the external environment, the Survey notes that global downside risks are prominent, with geopolitical churn and economic fragmentation keeping the outlook uncertain. It adds that global conditions are feeding into external uncertainties for India, even if they do not pose immediate macroeconomic stress at this stage.

The Survey’s view is that global risks remain manageable, but it stresses the need to preserve buffers and maintain policy credibility, arguing India must approach the next year with caution, without slipping into pessimism.

It also notes that the balance of risks around India’s growth outlook is broadly even, with supportive domestic factors offsetting external uncertainty.

Fiscal path “stands out” as global debt pressures rise

The Survey highlights India’s fiscal direction as a relative bright spot, noting that the government’s fiscal trajectory stands out at a time when global public debt levels remain elevated.

It indicates that the fiscal position is on track and reflects adherence to the budgeted glide path, while also pointing to the scope for containing interest costs through active debt management going forward.

The document also flags that the government may be able to raise additional receipts through equity sales in select public sector undertakings.

GST reforms: demand support, revenue resilience

On taxation, the Survey flags the role of GST rate changes in supporting demand while maintaining revenue resilience. It also signals that the next leg of GST reforms could sharpen focus on process and compliance improvements, including by strengthening the e-way bill system.

Rupee, inflation measurement and tariff pressure

The Survey also touches on currency valuation and inflation metrics amid a volatile global environment.

It suggests that the rupee’s valuation is not fully reflecting India’s economic fundamentals, and adds that an undervalued rupee may not necessarily be damaging in a period shaped by US tariff pressures.

On inflation, it calls for a careful assessment of the CPI base year revision, noting that such a change will influence how inflation trends are interpreted and how underlying price dynamics are studied.

US trade talks likely to close this year

On trade policy, the Survey indicates that trade negotiations with the United States are expected to conclude during the year, as India navigates shifting tariff dynamics and a tougher global trade environment.