The Economic Survey, tabled by Finance Minister Nirmala Sitharaman in Parliament on Friday, projects India's real GDP growth for 2025-26 to be between 6.3% and 6.8%, "keeping in mind the upsides and downsides to growth." The Survey expects the government's emphasis on MSMEs and strong rabi crop production to drive growth and employment in the economy.
Looking ahead, India’s economic prospects for FY26 appear balanced. However, headwinds to growth include elevated geopolitical and trade uncertainties, as well as potential commodity price shocks. Domestically, the translation of order books in the private capital goods sector into sustained investment growth, improvements in consumer confidence, and corporate wage increases will be key factors in fostering growth, the Survey stated.
Rural demand, supported by a rebound in agricultural production, expected relief in food inflation, and macroeconomic stability, provides an upside to near-term growth. To enhance its medium-term growth potential, India must improve its global competitiveness through grassroots-level structural reforms and deregulation, the Survey added.
The report also highlights that inflation in the economy is under control, which will pave the way for a stable growth trajectory.
"The government’s proactive policy interventions have been crucial in stabilizing inflation. These measures include strengthening buffer stocks for essential food items, periodic open market releases, and efforts to ease imports during supply shortages. Despite these challenges, there are positive signs for inflation management in India," it stated.
Private consumption remained steady in 2024-25, reflecting strong domestic demand. Fiscal discipline, supported by a trade surplus in services and healthy remittance growth, helped maintain macroeconomic stability. Together, these factors provided a solid platform for sustained growth despite external uncertainties.
The Survey also acknowledges significant progress in government initiatives aimed at empowering citizens through education, healthcare, skill development, and social infrastructure development.
It highlights an increase in the social services expenditure of the government as a percentage of total expenditure, rising from 23.3% in FY21 to 26.2% in FY25 (BE) at a compound annual growth rate (CAGR). The combined social services outlay of the central and state governments grew from Rs 14.8 lakh crore in FY21 to Rs 25.7 lakh crore in FY25.
Chief Economic Advisor V. Anantha Nageswaran, in the Economic Survey, emphasized the need to focus on systematic deregulation as a key agenda under Ease of Doing Business 2.0.
"Strategic and systematic deregulation can catalyze growth, innovation, and competitiveness. It is critical to fostering innovation and creating a viable Mittelstand, i.e., India's SME sector. With deregulation, India's Mittelstand can help states weather economic shocks, realize the country’s manufacturing aspirations, attract long-term investments, and drive sustainable, employment-sensitive growth," he stated.
The Economic Survey 2025 also underscores the urgency of climate adaptation for India, given its heightened vulnerability to climate change. It points out that developing countries like India bear a disproportionate burden of climate change and must deal with the consequences of historical emissions. Therefore, India needs to undertake climate adaptation measures on a priority basis, it added.
Read also| MI Owners Secure 49% Stake in The Hundred Franchise Oval Invincibles: Report
Read also| India’s Digital Economy Projected to Contribute One-Fifth of GDP by 2030