India remains the fastest-growing major economy and the Economic Survey 2025-26 predicts a GDP growth of 6.8-7.2% for the fiscal year 2026-27. India’s domestic fundamentals are "rock solid," the document, which was written by Chief Economic Advisor (CEA) Dr. V. Anantha Nageswaran, says.
Key Growth Drivers for FY27
The survey ascribes this brighter growth outlook to a few key reasons:
- Private Capex Cycle: After years of caution, private sector investment is realizing full potential now and investments in manufacturing and green energy are at their highest.
- Digital Infrastructure: The expanding Digital Public Infrastructure (DPI) will contribute 0.5%–0.8% to annual GDP growth.
- Agricultural Resilience: With stronger-than-projected monsoons late in 2025 and technology upgrades, the country’s farming sector is forecast to grow at 3.5 percent annually.
The 'Inflation-Fiscal' Balancing Act
Despite high growth, the Survey acknowledges the challenging nature of the economy in existence.
- Inflation: Assuming ordinary weather and steady international oil prices, the Survey estimates that retail inflation will slow to around 4.5% in the fiscal year 2026-27. However, “imported inflation,” arising from trade disruptions, also must be measured, it adds.
- Fiscal Deficit: The Department is still keen on advancing its fiscal glide path and wants to achieve a fiscal deficit below 4.5% of GDP in the next year versus the revised FY26 forecasts.
Focus on “Last-Mile Delivery”
Consistent with Prime Minister Narendra Modi’s statement at the beginning of the Budget Session, the Survey singles out “Last-Mile Delivery” as a priority. It argues the “Reform Express” has to move from macro-level policy shifts to grassroots implementation for all the 7% growth, if it is to yield increased household income and jobs in the countryside.
The Global Backdrop
While based on the money, the Survey noted that India’s growth is taking place in a world marked by “fragmented trade.” But some of the new milestones like the India-EU Free Trade Agreement are likely to provide a considerable cushion, especially if they help boost exports of textiles, pharmaceuticals and engineering.
With Finance Minister Nirmala Sitharaman facing the Union Budget day on February 1, this Survey contributes to the evidence-based confidence that India is now, more than ever, expected to transform into a $5 trillion economy in the coming several years.
