The Economic Survey has struck a cautious tone this year, factoring in global risks and uncertainties against domestic resilience while outlining the outlook for the year ahead.
It has forecast GDP growth of 6.8-7.2% for 2026-27, lower than the 7.4% estimate for the current year. The slowdown is projected for next year even as growth outpaced its FY26 projections.
The forecast, while reflecting confidence in domestic fundamentals, also highlights that geopolitical tensions, fragmented trade, and uneven global expansion continue to cloud the external environment.
The Economic Survey’s track record in forecasting growth has not been completely accurate, with actual growth diverging from the projected range in both directions. To be sure, the projections given by the Economic Survey come way in advance and are given once a year.
On the other hand, the Reserve Bank of India and other multilateral organizations like the International Monetary Fund (IMF) give multiple projections and often have the room to adjust their projections based on the evolving economic situations and risks.
Data shows that the actual GDP growth diverged from the Economic Survey’s projections in five of the seven years analyzed (FY17-FY26, barring the pandemic-hit years FY20-FY22). Only in FY18 and FY25, actual GDP growth fell within the range given by the Economic Survey.
The divergence has ranged 40-60 basis points in both directions in most years, except in FY24, when it was 240 points (GDP growth was 9.2% as against the upper end of the 6.8% range given by the survey).
The growth anchors
The Economic Survey’s FY27 projections are broadly in line with the RBI’s projection of 6.7-6.8% for the first half of the year. The survey pointed to a gradual shift in India’s growth dynamics—one increasingly anchored in strong domestic fundamentals and supported by a resilient external services sector. “The outlook for FY27 is shaped by these domestic strengths, alongside evolving external conditions. The chapter concludes that India’s medium-term growth potential has strengthened to 7%, positioning the economy on a path of steady expansion amid global uncertainty,” the survey said.
Resilient consumption and improving private investment intentions are expected to sustain momentum while providing a buffer against external shocks, the survey noted.
Services exports, in particular, have emerged as a critical growth driver. The sector recorded an all-time high of $387.5 billion in FY25, marking a robust 13.6% year-on-year increase and reinforcing India’s position as a global hub for technology, business, and professional services. The momentum has carried into FY26, with services exports rising 6.5% to $304 billion during April–December, significantly outpacing import growth and generating a surplus of $151.7 billion—enough to offset more than 60% of the merchandise trade deficit.
Software services continue to anchor export performance, while business services are expanding rapidly, supported by India’s growing network of Global Capability Centres, which recorded a 7% compound annual growth rate between FY20 and FY25.
Together, these trends underscore a broader transition in India’s growth model, where robust domestic demand is increasingly complemented by the steady strength of services trade.