The Economic Survey 2025–26, tabled in Parliament on January 29, 2026, estimates India’s real GDP growth at 7.4% for FY26 and projects a growth range of 6.8–7.2% for FY27. Highlighting India as an “oasis of macro stability,” the report notes that the country’s potential medium-term growth has risen to 7%, driven by strong domestic consumption and sustained infrastructure investment. It also underscores ongoing reform needs in fiscal federalism, health, tech governance (like AI), and labour markets as India navigates global uncertainties and structural transformation.
A key theme of the Survey was the role of deregulation and ease of compliance in improving productivity, competitiveness, and investment climate.
India’s Growth Momentum: A Strong Outlook & Macroeconomic Stability
• GDP Growth: India is estimated to grow at 7.4% in FY26, maintaining its position as the fastest-growing major economy.
• Future Outlook: Projected growth for FY27 is around 6.8–7.2%.
• Drivers: Private consumption revival, sustained capital expenditure, and productivity gains
• Potential Growth Upgraded: Potential GDP growth raised to ~7.0%, reflecting structural reforms and investment momentum.
• Inflation: Headline inflation averaged 1.7% (April–Dec 2025) — one of the lowest on record — helping support macro stability.
India’s Real GDP Growth Trend (FY16–FY27)
• Historical Data (FY16–FY25): The economy experienced high growth (8.3% in FY16), dipped significantly during the COVID-19 pandemic (-5.8% in FY21), and saw a strong rebound, with growth reaching 6.5% in FY25.
• Recent Performance (FY26): The Economic Survey 2025-26 estimates a robust Real GDP growth of 7.4% for the current fiscal year (FY26), driven by the services sector and manufacturing.
• Projected Growth (FY27): The Economic Survey projects a steady growth rate in the range of 6.8% to 7.2% for FY27, citing strong domestic demand despite external uncertainties.
Key Data Points for Graph:
• FY16: 8.3%
• FY17: 6.8%
• FY18: 6.5%
• FY19: 3.9%
• FY20: -5.8%
• FY21: 9.7%
• FY22: 7.6%
• FY23: 9.2%
• FY24: 6.5%
• FY25 (PE): 6.5% – 6.6%
• FY26 (FAE): 7.4%
• FY27 (Proj.): 6.8% – 7.2%
Note: PE = Provisional Estimates, FAE = First Advance Estimates, Proj. = Projected.
Fiscal Stability Anchored by Credible Consolidation
• Fiscal Deficit: Achieved 4.8% of GDP in FY25, with a targeted 4.4% in FY26 — part of ongoing fiscal consolidation since FY21.
• Revenue Strengthening: Government revenue receipts improved as a share of GDP; direct tax base and GST collections expanded. Centre’s revenue receipts strengthened from an average of 8.5% of GDP (FY16–FY20) to 9.2% of GDP in FY25, driven by improved non-corporate tax collection and technology-driven compliance.
• State Finances Concern: The Survey flags rising state revenue deficits and urges balanced fiscal discipline across central and state levels.
• Quality of Spending: While narrowing the deficit, the government has shifted expenditure toward capital investment, with effective capex rising from 2.7% of GDP pre-pandemic to 4% of GDP in FY25.
• Future Target: The government aims to bring the fiscal deficit below 4.4% of GDP in FY26, supporting a long-term goal of a 50±1% debt-to-GDP ratio by FY31.
• Gross Non-Performing Assets (GNPAs) at multi-decade low of 2.2% (Sept 2025)
• Fiscal discipline supports macroeconomic stability amid global uncertainties
Fiscal Deficit and Revenue Receipts (% of GDP)
India’s fiscal position reflects a clear trajectory of consolidation following the pandemic shock. In FY20 (pre-Covid), the fiscal deficit stood at 4.6% of GDP, with revenue receipts averaging around 8.5% of GDP during FY16–20, serving as the pre-pandemic baseline. The onset of Covid-19 led to a sharp widening of the deficit to 9.2% of GDP in FY21, driven by peak pandemic-related borrowing, while revenue receipts broadly remained at pre-Covid averages. With economic recovery underway, the fiscal deficit moderated to 6.7% in FY22 and further to 6.4% in FY23, alongside an improvement in average revenue receipts to about 9.1% of GDP during FY22–25, marking the beginning of fiscal consolidation. This trend continued in FY24 (Provisional Actuals), with the deficit narrowing to 5.6% of GDP. In FY25 (PA/RE), the fiscal deficit declined further to 4.8% of GDP, outperforming the budgeted target, supported by revenue receipts of 9.2% of GDP (PA). Looking ahead, the government has set a fiscal deficit target of 4.4% of GDP for FY26 (BE), reinforcing its commitment to medium-term fiscal consolidation.
Note: PA = Provisional Actuals, RE = Revised Estimates, BE = Budget Estimates.
External Sector Strength: Trade & Remittances
• India’s share in global merchandise exports nearly doubled: 1% (2005) → 1.8% (2024)
• Services exports hit all-time high of USD 387.6 billion in FY25, growing 13.6%
• Largest global recipient of remittances: USD 135.4 billion in FY25
• Forex reserves at USD 701.4 billion (Jan 2026), covering 11 months of imports
1. Forex Reserves Trend (USD Billion)
India’s Foreign Exchange Reserves have been in an overall uptrend, surpassing previous highs from September 2024.
FOREX RESERVES TREND (USD Billion)
720 | 701.4*
700 | 668.3
680 | 644.4
660 | 617.2
640 |
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FY24 Mar-25 Jan 16, 2026
*As of 16th January 2026, reserves reached $701.4 billion, providing cover for ~11 months of imports and 94% of external debt.
2. Total Export Growth (USD Billion)
Total exports (Merchandise + Services) showed continued momentum following a record FY25.
TOTAL EXPORT GROWTH (USD Billion)
850 | 825.3*
800 | 778.1
750 |
700 |
+——————————————
FY24 FY25 (Record)
*Total exports in FY25 grew 6.1% YoY to $825.3 billion. The momentum continued in H1 FY26 (April-Sept 2025), which was the highest ever H1 export.
Key Highlights from Economic Survey 2025-26
• Forex Reserves: Rose to USD 701.4 billion as of 16 January 2026, up from USD 668.3 billion at end-March 2025.
• Export Performance: Total exports reached an all-time high of USD 825.3 billion in FY25 (6.1% YoY growth).
• Services Strength: Services exports hit a record USD 387.6 billion in FY25 (13.6% growth).
• Remittances: India remained the world’s largest recipient, with inflows reaching USD 135.4 billion in FY25.
• Trade Deficit: Remained moderate at around 1.3% of GDP in Q2 FY26.
• Export Drivers: Key sectors driving export growth in H1 FY26 included Electronic Goods (41.9%), Drugs/Pharma (6.4%), and Engineering Goods (5.3%).
• Challenges: The survey noted that despite strong performance, the global environment remains fragile with risks from trade fragmentation.
Inflation Tamed and Anchored
• Domestic inflation averaged 1.7% (April-Dec 2025), well below target
• Consumer Price Inflation expected to align around 4% in FY26
• Food inflation easing supports rural demand recovery
Based on the Economic Survey 2025-26, tabled on January 29, 2026, India experienced a “Goldilocks” moment in 2025—high growth (8.2% in H1 FY26) combined with significantly low inflation, referred to as “Tamed and Anchored”.
Inflation Trends: CPI & WPI (2019-2025)
The Economic Survey 2025-26 highlights a consistent downward trajectory in retail inflation (CPI) over the past four years, moving from 6.7% in FY23 to a record low average in 2025.
• CPI Headline Inflation (Retail): Dropped to an average of 1.7% during April–December 2025, the lowest since the current CPI series began.
• CPI Monthly Trend 2025:
o January 2025: 4.26%.
o June 2025: 2.10%.
o October 2025: 0.25% (Record low).
o November 2025: 0.71%.
o December 2025: 1.33% (Provisional).
• WPI Inflation (Wholesale): Mirrored the moderation, easing from 2.31% in Jan 2025 to a provisional -0.32% in November 2025. WPI edged up slightly to 0.83% in December 2025, largely due to manufactured goods, but remained very low.
Approximate Inflation Trend (Year-on-Year %)
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Year | Avg CPI | Trend
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2019 | ~4-5% | Moderate
2020 | ~6.6% | Elevated
2021 | ~5.1% | Moderate
2022 | ~6.7% | High
2023 | ~5-6% | Moderating
2024 | ~4.9% | Significant Decline
2025 | ~1.7%* | Historic Low (“Tamed & Anchored”)
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(*April-Dec 2025 Avg)
Key Drivers of 2025 Inflation Trends
• Food Price Moderation: Sharp decline in food inflation, especially vegetables and pulses, driven by favourable supply-side measures.
• Fuel Deflation: Deflation in the fuel and light segment continued for 18 months, aiding the overall reduction in WPI.
• GST Rationalization: Reforms implemented in September 2025 boosted household purchasing power and lowered goods inflation.
• Base Effect: Favourable base effects, particularly in H1 2025, contributed to lower year-on-year headline figures.
Agriculture & Rural Economy: Productivity & Income Security
• Agriculture growth estimated at 3.8% in FY25, driven by horticulture, livestock, fisheries
• Record Kharif foodgrain production: 1647.05 LMT in 2024, up 89.37 LMT YoY
• 55.02 crore bank accounts under PMJDY, with 36.63 crore in rural/semi-urban areas
Based on the Economic Survey 2025-26, the Indian agricultural sector and rural financial inclusion have shown significant resilience and growth.
Agricultural Production & Growth (2025-26)
• Growth Momentum: The agriculture and allied sector achieved an average annual growth of approximately 4.4% at constant prices over the last five years. Growth was 3.5% in Q2 FY 2025-26.
• Decadal Performance: The sector’s decadal growth was 4.45% (FY16-FY25), notably boosted by livestock (7.1% growth) and fisheries (8.8% growth).
• Record Production: Foodgrain production reached a record estimate of 3,577.3 lakh metric tonnes (LMT) in AY 2024–25.
• Horticulture Surge: Horticulture production rose to 367.72 million tonnes in 2024-25, contributing significantly to agricultural GVA.
• Allied Sector Drive: Livestock GVA saw a substantial increase between FY15 and FY24, and fisheries production grew significantly between 2014 and 2025.
Rural Financial Inclusion & Empowerment (2025-26)
• Banking the Unbanked: The Pradhan Mantri Jan Dhan Yojana (PMJDY) recorded 55.02 crore accounts as of March 2025, with a large number in rural and semi-urban areas.
• Financial Inclusion Index: The RBI’s Financial Inclusion (FI) Index increased to 67.0 in March 2025.
• Direct Income Support: Over ₹4.09 lakh crore has been provided to more than 11 crore farmers through PM-KISAN.
• Rural Credit: Ground Level Credit (GLC) exceeded the national target in FY25, reaching ₹28.69 lakh crore.
• Women Empowerment: Over 10 crore rural women are part of 90 lakh Self-Help Groups (SHGs), and the number of ‘Lakhpati Didis’ surpassed 2.5 crore.
• Digitalization: Rural land records are 99.8% digitized, and drone surveys under the SVAMITVA scheme have been completed in a significant number of villages.
📊 Summary Data Table
Parameter Metric/Status (2024-25)
Agri & Allied Avg Growth ~4.4% (Past 5 years)
Q2 FY26 Agri Growth 3.5%
Foodgrain Production 357.73 Million Tonnes (Record)
Horticulture Production 367.72 Million Tonnes
PMJDY Accounts (Rural) 36.63 Crore
Lakhpati Didis > 2.5 Crore
Industry & Services: Structural Transformation
• Industrial sector growth at 6.2% in FY25; capital goods and consumer goods industries expanding
• Services sector growth robust with new frontiers in logistics, business services
• Investment in infrastructure and reforms driving competitiveness
A comparison of sector-wise Gross Value Added (GVA) growth between FY16 (pre-pandemic base) and FY25 (provisional estimates) reveals a significant structural shift, particularly in the resilience of the agriculture sector and the expansion of the services and manufacturing domains.
Sector-wise GVA Growth Comparison (%)
Sector FY16 (Actual) FY25 (Provisional) Key Driver in FY25
Agriculture & Allied 0.6% 4.6% High-value allied sectors like Livestock (7.1%) and Fisheries
Industry 9.4% 6.2% Construction and utility services support
Services 9.0% 7.2% Digitally delivered services (IT, Finance) and professional services
Total GVA 8.0% 6.4% Broad-based recovery above pre-pandemic trends
Key Insights from the Survey
• Agricultural Resilience: The sector recorded its highest decadal growth rate of 4.45% between FY16-FY25, moving from a low of 0.6% in FY16 to a robust 4.6% in FY25, driven by record horticulture and foodgrain production.
• Services Dominance: Services remain the primary engine of the economy, contributing 56.4% to the total GVA in the latest estimates—the highest share ever recorded.
• Structural Recovery in Industry: While the growth rate in FY25 (6.2%) is numerically lower than the FY16 peak (9.4%), the Survey notes a structural recovery in manufacturing GVA, which accelerated to 9.13% in the second quarter of the subsequent year (FY26).
• Overall Momentum: Real GVA is estimated to grow at 7.3% for the full FY26 period, reflecting a “Goldilocks moment” of strong growth combined with historic low inflation.
Employment, Skill Development & Social Progress
• Unemployment rate declined to 3.2% in 2023-24 from 6% in 2017-18
• Skill development initiatives aligned with labor code reforms and formalization
• Social sector expenditure growing at 15% annually (FY21-FY25)
• Health expenditure share increased; out-of-pocket expenses reduced significantly
Based on the Economic Survey 2025-26 presented on January 29, 2026, here are the key trends for the unemployment rate and social sector expenditure.
1. Unemployment Rate (UR) Trends
The survey highlights a steady improvement in labour market conditions, with official data indicating a downward trajectory in joblessness.
• Declining Trajectory: The annual unemployment rate (Usual Status) fell from 6% in 2017-18 to 3.2% in 2023-24.
• Recent High-Frequency Data (CWS): For the first nine months of FY26, the rate fluctuated between 4.7% and 5.6%.
o November 2025: 4.7% (lowest since April 2025).
o December 2025: 4.8% (remained largely stable).
• Demographic Highlights:
o Rural UR: Reached a new low of 3.9% in late 2025.
o Urban UR: Remained higher at 6.7% as of December 2025.
o Female Participation: A significant jump in the Female Labour Force Participation Rate (FLFPR) to 41.7% in 2023-24 from 23.3% in 2017-18 was noted.
2. Social Sector Expenditure (SSE) Trends
The “General Government” (Centre + States) social sector spending has shown a rising trend as a percentage of GDP to support inclusive growth.
• Expenditure as % of GDP:
o FY24: 7.0%.
o FY25 (Revised Estimate): 7.7%.
o FY26 (Budget Estimate): 7.9%.
• Growth Rates (CAGR FY22–FY26):
o Overall SSE: Grew at a CAGR of 12%.
o Education: Grew at a CAGR of 11%.
o Health: Grew at a CAGR of 8%.
• Sectoral Shift: There is a visible shift toward infrastructure-linked social spending, with housing, urban development, and water/sanitation (e.g., Jal Jeevan Mission) gaining priority over traditional food and rural development subsidies.
Summary Table: Economic Survey 2025-26
Indicator Recent Value (FY26 / 2025) Base/Previous Year
Unemployment Rate (Annual) 3.2% (2023-24) 6.0% (2017-18)
Monthly Unemployment (CWS) 4.8% (Dec 2025) 5.6% (June 2025)
SSE as % of GDP 7.9% (FY26 BE) 7.0% (FY24)
Female LFPR 41.7% (2023-24) 23.3% (2017-18)
Climate & Environment: Building Resilience
• Focus on energy transition: 15.8% YoY increase in solar and wind capacity (Dec 2024)
• Adaptation strategies prioritized alongside sustainable development goals
Based on the Economic Survey 2025-26 (released Jan 29, 2026), India’s renewable energy (RE) sector has experienced historic growth, driven by rapid capacity additions and a structural transformation towards a cleaner grid.
Key Renewable Energy Trends (As of November/December 2025):
India’s total renewable energy capacity significantly increased from 76.38 GW in March 2014 to 253.96 GW by November 2025, more than tripling over a decade. The period of FY26 (up to December 31, 2025) saw a record addition of 38.61 GW, the highest annual expansion. India has exceeded its COP26 target, with 51.93% of installed power capacity from non-fossil fuel sources by the end of December 2025. Solar energy was the primary driver in 2025-26, adding 30.16 GW, followed by wind (4.47 GW) and hydropower (3.24 GW). Globally, India holds the third position in overall renewable energy and installed solar capacity, and fourth in installed wind capacity.
Challenges Identified in the Survey:
The Economic Survey 2025-26 identified challenges to maintaining this growth, including the material intensity of solar and wind technologies (requiring silver, polysilicon, and aluminium). Other obstacles include high capital costs, delays in land acquisition, and grid limitations. The survey also stressed the need for large-scale energy storage solutions like Battery Energy Storage Systems (BESS) and Pumped Storage Hydropower (PSP) to address the variable nature of renewable energy.
Key Data Points for 2025-26 (Apr–Nov/Dec):
• Installed Solar reached 132.85 GW by Nov 2025.
• Installed Wind reached 53.99 GW by Nov 2025.
• Indigenous solar module manufacturing capacity reached approximately 144 GW per annum.
• structure investments to support green growth and urbanization
Medium-Term Outlook: Deregulation & Structural Reforms
• Emphasis on deregulation to accelerate growth and improve competitiveness
• Focus on digital infrastructure, labour reforms, and investment climate
• India’s potential GDP growth pushed towards ~7% with reforms
Domestic Demand & Consumption
• Consumption-Led Growth: Private consumption reached ~61.5% of GDP, its highest since FY12, underpinning sustained domestic demand.
• Domestic demand continues to anchor growth against external headwinds.
Manufacturing & Infrastructure
• Manufacturing & Investments: Strong growth in manufacturing GVA and production-linked investment schemes drove jobs and output.
• Infrastructure Expansion: National highways, railways, airports, and energy infrastructure expanded sharply, supporting competitiveness.
• Innovation & Tech: India improved in global innovation rankings; semiconductor and digital infrastructure projects advanced.
MSMEs & Employment
MSMEs are recognised as a critical backbone of the economy, contributing significantly to output, exports, and employment and the second-largest employer in the country after agriculture.
MSME Economic Indicators (2025-26)
The survey provides the following core statistics regarding the sector’s contribution to the national economy:
• GDP Contribution: MSMEs account for 31.1% of India’s Gross Domestic Product (GDP).
• Manufacturing Output: The sector contributes 35.4% of the country’s total manufacturing.
• Exports: Approximately 48.58% of India’s national exports are driven by MSMEs.
• Credit Growth: MSME credit remained a primary driver of industrial credit growth in H1 FY26, significantly outpacing credit expansion for large industries.
Employment Statistics
The MSME sector is a critical engine for job creation, with the survey noting:
• Total Workforce: Over 32.82 crore (328.2 million) persons are employed across the sector.
• Enterprise Count: There are over 7.47 crore MSME enterprises in India.
• Registration Growth: As of September 2025, approximately 6.82 crore MSMEs were registered on the Udyam Registration Portal and Udyam Assist Platform, collectively employing 29.77 crore people.
• Scheme Impact: The Prime Minister’s Employment Generation Programme (PMEGP) alone assisted 89,118 enterprises in 2023-24, generating an estimated 7.12 lakh jobs.
Key Strategic Initiatives & Reforms
The survey outlines several measures to enhance MSME competitiveness and formalisation:
• Classification Revisions: Investment and turnover limits for MSME classification have been raised 2.5 times and 2 times respectively to encourage scaling and technological upgrades.
• Credit Support: The Self-Reliant India (SRI) Fund has invested ₹15,442 crore across 682 MSMEs as of November 30, 2025.
• Financial Security: The credit guarantee cover for micro and small enterprises was increased from ₹5 crore to ₹10 crore, facilitating additional credit of ₹1.5 lakh crore over five years.
• Labour-Intensive Focus: New schemes in sectors like footwear, leather, and toys are expected to create 22 lakh jobs.
• Gender Inclusivity: The FY26 budget announced support for 5 lakh first-time women entrepreneurs from SC/ST communities with term loans up to ₹2 crore.
Conclusion: India’s Path to Sustainable, Inclusive Growth
• Sustained reforms and deregulation key to unlocking medium-term growth potential
• Balancing global uncertainties with domestic strengths and inclusive growth
• Vision: A resilient, competitive, and development-driven India by 2030
• Call to action: Embrace innovation, infrastructure, and inclusive policies for shared prosperity
• Strong macro fundamentals and reform momentum underpin growth prospects
• Continued investment in infrastructure, technology, and human capital key
• Vision aligned with Viksit Bharat 2047 for a resilient, competitive economy
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