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Economic Survey 2025: India to grow at 6.3-6.8% in FY26; deregulation, reforms could unleash domestic-led growth
To become a developed country by 2047, India needs to grow at around 8% for the next decade or two. However, global economic and political conditions will play a crucial role in determining the feasibility of this target, the survey acknowledged.
Economic Survey 2025: India’s economy is expected to grow between 6.3% and 6.8% in FY26 as fundamentals of the economy remain strong, but needs sustained growth of close to 8% a year for at least for a decade to become a developed nation by 2047, said the Economic Survey 2024-25 tabled in Parliament on Friday.
“The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3% and 6.8%,” said the Economic Survey, authored by Chief Economic Advisor V Anantha Nageswarana and his team.
India’s GDP is projected to grow at a four-year low of 6.4% in the current fiscal on the back of weak manufacturing and investments. This is lower than the 6.5-7% growth projected in last year’s Economic Survey and the Reserve Bank of India’s 6.6% estimate.
India has set an ambitious goal of becoming a developed economy, or Viksit Bharat, by the centenary of Independence. To achieve this, the country needs to maintain an average growth rate of around 8% at constant prices for the next decade or two. However, the survey acknowledged that global economic and political conditions will play a crucial role in determining the feasibility of this target.
It also called for de-regulation and reforms that could unleash domestic-led growth, given that the era of rapid growth in global trade is fading.
Reforms in 10 key areas
The survey, an independent report card of the economy that also offers potential policy recommendations unconstrained by political pressures, made a strong case for reforms in 10 areas such as land, building, labour, utilities and logistics, and proposed potential approaches to reforms. For example, controls that distort markets should be minimised and a 'minimum necessary, maximum feasible' approach should be adopted for setting regulations, the survey said.
Reforms, it said, may set off a ‘butterfly effect’ in which small actions have large consequences. “Small acts of deregulation may set off big waves of entrepreneurship, investment, innovation and growth,” the survey added.
India’s economic prospects for FY26 are balanced, the survey said, identifying geopolitical and trade uncertainties and possible commodity price shocks as headwinds. Domestically, the translation of order books of private capital goods sector into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting growth, it added.
Other announcements
The survey forecast that inflation will remain under control, with consumption expected to stabilise. It also predicted that rural demand would gain momentum in the coming months. It highlighted a decrease in retail headline inflation from 5.4% in FY24 to 4.9% during April-December 2024 (9MFY25) owing to government initiatives and monetary policy measures.
Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation, and a stable macro-economic environment provide an upside to near-term growth, it added.
“Overall, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential,” the survey noted.
Food inflation is likely to soften in the fourth quarter of FY25 with the seasonal easing of vegetable prices and kharif harvest arrivals. Good rabi production is likely to contain food prices in the first half of FY26. Adverse weather events and increases in international agricultural commodity prices, however, pose risks to food inflation. Global energy and commodity prices have softened in the recent past, making core inflation outlook benign, the survey said.
The survey also said India’s manufacturing sector has faced challenges owing to weak global demand and domestic seasonal fluctuations. Despite this, private consumption remained stable, underscoring resilient domestic demand. Fiscal prudence coupled with a strong external balance—and supported by a surplus in services trade and healthy remittance inflows—has contributed to overall macroeconomic stability, it said.
"Private consumption remained stable, reflecting steady domestic demand. Fiscal discipline and strong external balance, supported by a services trade surplus and healthy remittance growth, contributed to macroeconomic stability. Together, these factors provided a solid foundation for sustained growth amid external uncertainties," the survey noted.
This Economic Survey 2025 comes just six months after the previous one was presented in July 2024, after the general election.
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Business NewsEconomyEconomic Survey 2025: India to grow at 6.3-6.8% in FY26; deregulation, reforms could unleash domestic-led growth
First Published:31 Jan 2025, 01:56 PM IST
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