Economic Survey Budget 2026 Highlights: India's GDP growth projected to rise 6.8-7.2% in FY27; Check key takeaways

Sanjiv Malhotra, Senior Advisor, Head of Tax Practice, Shardul Amarchand Mangaldas & Co, said that he was keen to analyse the economic survey in relation to the manufacturing sector as the industry has picked up well in FY2025-26.

“The economic survey is on expected lines. Growth numbers looks strong and with inflation under check, India seems to be reasonably stable on the macroeconomic factors. Amongst others, one key area I was keen to analyse in the economic survey was in relation to the manufacturing sector,” said Malhotra.

“I am glad to note that manufacturing sector has picked up well in 2025-26. Indian government’s PLI schemes seem to be displaying visible results. The early-stage growth in Indian semiconductor manufacturing space deserves a special mention. Tax collections are better than expected. This is good news and hopefully, this gives reasonable room to the government to allocate resources to identified strategic sectors,” said the expert.

Amit Gupta, Partner at Saraf and Partners, said that the Economic Survey 2025-26, said that the Economic Survey 2025-26 portrays a positive narrative on India’s trajectory and strong macroeconomic fundamentals in the backdrop of political and economic turmoil.

“The Economic Survey 2025-26 portrays a positive narrative on India’s trajectory and strong macroeconomic fundamentals in the backdrop of global political and economic turmoil. Even whilst listing out three possible scenarios that could play out globally, the Survey pegs India at a better footing compared to other countries. India’s fiscal resilience was also reflected in the upgrade to its sovereign ratings by international agencies,” said the expert.

Gupta highlighted that India's tripod of tax reforms in the form of reduced corporate tax rates, personal income tax reliefs and radical overhaul of the Goods and Services Tax are delivering results, but sustaining momentum will require continued simplification, further widening of the base, and tighter coordination with states.

“The combination of tax relief, improved ease of doing business, sustained public investment, and deliberate shift toward capital formation and human capital investment cumulatively create a favorable environment for India’s economy continued growth,” said Gupta.

Mahesh Makhija, Partner and Technology Consulting Leader, EY India, said that this year's Economic Survey highlights the need to derive greater value from existing IndiaAI Mission investments by scaling their reach.

The expert also said that a federated approach to regulation is critical to ensure the artificial intelligence (AI) adoption translates into productivity, trust and sustainable economic value.

“The survey highlights the need to derive greater value from existing IndiaAI Mission investments by scaling their reach, while aligning AI adoption with the DPDP framework through incentive-linked mechanisms. Equally, a federated approach to regulation, where institutions embed AI governance within their core operations, this will be critical in ensuring AI adoption translates into productivity, trust and sustainable economic value,” said Makhija.

The Economic Survey highlighted that the domestic inflation dynamics so far in the financial year ending 2025-26 reflect a broad-based easing in price pressures due to sharp disinflation in food prices in the Indian economy.

India's consumer price index (CPI) inflation dropped to 1.7%, primarily driven by a fall in prices of vegetables and pulses, supported by favourable farm conditions, supply-side interventions, and a strong base effect.

The survey also mentioned that core inflation has exhibited persistence, largely influenced by price spikes in precious metals. Adjusting for these, underlying inflation pressures appear materially softer, indicating limited demand-side overheating.

Economic Survey LIVE: The Economic Survey highlighted that Indian Railways' earnings from freight operations accounted for 68% of the total earnings during the financial year 2022-23.

“The profit from freight traffic was utilised to offset the loss on passenger and other services, leaving an uncovered loss of ₹5,257 crore from passenger operations,” said the survey.

The latest numbers showed that the share of total freight earnings for Indian Railways has declined gradually over the last five years to 62% in FY2025-26, compared to 68% in FY2022-23.

“During the last 5 years, the passenger fare has been rationalised on three occasions i.e., on 1 January 2020, 1 July 2025 and 26 December 2025, and consequently, the share of freight earnings in gross traffic receipts has declined gradually from 68% in FY23 to 65% in FY25 and is budgeted to be 62% in FY26,” said the latest survey.

Economic Survey LIVE: Rajeev Sharan, Head of Criteria, Model Development & Research at Brickwork Ratings, said fiscal discipline in the Indian economy is evident as the capital expenses rise amid higher revenue receipts from the country.

“The Economic Survey 2025-26 reaffirms India’s position as the fastest-growing major economy, with real GDP growth projected at 7.4% in FY26,” said the expert. “Fiscal discipline is evident, with capex scaled to 4% of GDP and revenue receipts buoyant at 9.1%, enabling a 7.1 percentage point reduction in the debt-to-GDP ratio since FY20.”

The expert also explained that from a credit rating perspective, buoyant revenues, contained deficits, and robust forex reserves strengthen the case for a sovereign upgrade, reflecting improved debt sustainability and growth buffers amid EM peers’ strains.

Economic Survey LIVE: The Finance Ministry's Economic Survey for the financial year 2025-26 highlighted that India's strategy for artificial intelligence (AI) must be sequenced carefully to avoid premature lock-ins or regulatory overreach amid the heightened economic uncertainty and resource constraints.

“Artificial Intelligence does not confront India with a single policy question, but a series of choices that must be made under conditions of heightened uncertainty and resource constraints,” as per the survey.

The survey also said that, amid the capital, computing capacity, energy, and infrastructure constraints, it makes a case for a bottom-up approach with multiple sector-specific approaches under a single vision, with the potential to turn into a source of dignified employment for the people.

Economic Survey LIVE: Ministry of Finance's Economic Survey 2025-26 projected that the real gross domestic product (GDP) growth in the financial year ending 2026-27 is expected to be in the range of 6.8 to 7.2%.

The survey also marked a steady growth outlook for the Indian economy amid the global uncertainty, which brings the need for caution but not pessimism in the economy.

“The Economic Survey projects real GDP growth in FY27 in the range of 6.8 to 7.2%. The outlook, therefore, is one of steady growth amid global uncertainty, requiring caution, but not pessimism,” according to the economic survey.

Economic Survey LIVE: India's Defence Minister Rajnath Singh, in his recent post on X, lauded the Economic Survey for the financial year 2025-26 released on Thursday.

Singh said the Indian economy continued its strong growth momentum, and the country's growth potential has strengthened, positioning the country on a path of steady expansion amid global uncertainty.

“The Economic Survey 2025-26 highlights India’s strong macroeconomic performance and the Indian economy's continued strong growth momentum. Supported by strong macro fundamentals and a series of regulatory reforms, the Indian economy will not only sustain growth but also accelerate. The Economic Survey has made a strong case that with a stable domestic economy, controlled inflation, healthier balance sheets, resilient consumption demand and improved private investment, India’s growth potential has strengthened, positioning the economy on a path of steady expansion amid global uncertainty,” said Defence Minister Rajnath Singh in his post on X.

Economic Survey LIVE: India's Chief Economic Advisor, Anantha Nageshwaran, said that potential growth is expected to rise 7.5-8% over the next few years if the country is able to achieve manufacturing and export competitiveness.

“If we are able to achieve manufacturing and export competitiveness and pursue further process reforms in the areas of land and cost subsidisation, and bring down the cost of manufacturing. This 7% can even rise to 7.5-8%. In the next few years as well,” said CEA Nageswaran in his speech on Thursday.

It is important that states also start walking on the path of fiscal prudence and consolidation in coming years, says CEA Nageswaran

Rising global uncertainty has an impact on India’s capital and currency, said CEA Nageswaran.

Core inflation is well behaved if you take out gold and silver. Benign inflation trends are expected to continue next year as well, says CEA Nageswaran.

External sector does not show any warning as far as macroeconomics is concerned, says CEA Nageswaran

India is an oasis of macrostability in an otherwise turbulent world, says Chief Economic Advisor V. Anantha Nageswaran

Chief Economic Advisor V. Anantha Nageswaran briefs media on Economic Survey 2025

Economic Survey LIVE: Share of DIIs and FIIs by value of holdings

The DIIs have consistently maintained their position as net buyers in Indian equities, effectively countering FPI selling and reinforcing the strength of the domestic market. The increasing significance of DIIs as large net buyers is further reflected in their rising shareholdings. The share of DIIs (by value of holdings) surpassed that of foreign institutional investors (FII) for the first time in Q4 FY25 and has now reached an all-time high in Q2 FY26. In Q2 FY26, the share of DIIs (by value of holdings) stands at 18.3 per cent while that of the FIIs stands at 16.7 per cent, a 13-year low.

Economic Survey LIVE: A look at net purchases and Sales by FPIs and DIIs

As of 31 December 2025, the asset base under custody of FPIs stood at ₹81.4 lakh crore, marking a 10.4 per cent increase over March 31, 2025, driven largely by valuation gains in equities and steady accumulation in debt holdings. Within NSE-listed equities, however, the share of FPI ownership declined to 16.9 per cent (for Q2 FY26), in line with global risk aversion and sectoral reallocations.

India’s corporate bond market has demonstrated impressive growth, with outstanding issuances increasing from ₹17.5 trillion in FY15 to ₹53.6 trillion in FY25, growing with an annual rate of approximately 12 per cent. In FY25, the highest-ever fresh issuances were recorded, totalling ₹9.9 trillion. As of March 2025, the corporate bond market accounts for 15-16 per cent of the country’s GDP and corporate bond fundraising now complements bank credit, reflecting growing investor confidence and a gradual shift towards market-based financing.

During FY26 (till December 2025), 235 lakh of demat accounts were added, pushing the total count beyond 21.6 crore. A key milestone was the crossing of the 12-crore mark for unique investors in September 2025, with nearly a fourth of them being women, the Survey highlighted.

IPO volumes in FY26 (up to December 2025) were 20 per cent higher than FY25, and the amount mobilised was 10 per cent higher than the corresponding period of FY25. Listings on the main board, the primary market for established companies meeting stricter regulatory and size thresholds, rose from 69 to 94, with the amount raised increasing from ₹1,46,534 crore to ₹1,60,273 crore. A notable feature of IPO activity in FY26 (up to December 2025) was the prominence of Offer for Sale (OFS) components, where existing shareholders sell their stakes rather than the company issuing new shares. OFS accounted for 58 per cent of the total proceeds.

The total resource mobilisation from primary markets, encompassing both debt and equity, stands at ₹10.7 lakh crore during FY26 (till December 2025). Over the past five years, from FY22 to FY26 (till December 2025), India’s primary markets have been instrumental in channelising savings into productive investments, mobilising a total of ₹53 lakh crore through equity and debt issuances. Of this, ₹14 lakh crore was raised through equity issuances.

The imposition of US tariff sanctions, weaker-than-expected corporate earnings in Q1 FY26 and foreign capital outflows collectively weighed on market sentiment. However, a series of measures, including a personal income tax cut, a GST overhaul, easing of monetary policy, and receding inflation, as well as improved corporate performance in Q2 FY26, supported the market during the period.

The stability of the banking system in the country can be attributed to strong capital buffers, low non-performing asset ratios (NPAs), and increasing profitability. The favourable balance sheets of the SCBs bode well for the overall health of the economy. A significant improvement has been observed in the asset quality of SCBs, as evidenced by their gross non-performing asset (GNPA) ratio and net NPA ratio, having reached a multi-decadal low level and record low level, respectively. At the same time, the capital-to-risk-weighted-asset ratio (CRAR) of the SCBs remained strong at 17.2 per cent as of September 2025.

The impact of uncertainty on financial markets is not just limited to a rise in volatility and risk premia. Research shows that prolonged periods of uncertainty can affect the financial sector through at least three key channels.

> First, financial market participants are seen to defer decisions in the presence of uncertainty (via the real options channel). A rise in uncertainty will trigger a ‘wait-and-see’ sentiment, delaying investments and capital formation.

> Second, heightened uncertainty can raise the cost of finance through a rise in credit spreads and financial intermediation costs. In turn, this can impact the real economy by impeding the flow of credit.

> Finally, prolonged uncertainty can increase the possibility of sharper market corrections across asset classes. In some cases, these market corrections can pave the way for financial contagion, spreading to the entire financial sector and the real economy.

India’s recent fiscal performance reflects a careful balancing of growth imperatives and fiscal prudence. Strong macroeconomic fundamentals have been reinforced by a calibrated fiscal strategy that prioritised capital expenditure while steadily consolidating deficits and debt. The Centre’s commitment to a transparent and credible medium-term debt glide path has enhanced policy credibility, providing fiscal space and flexibility to respond to evolving domestic and global conditions without undermining stability, the Survey said.

Between April-November 2025, the share of India’s crude oil imports from the US increased to 8.1 per cent from 4.6 per cent in the same period in FY25, while UAE’s share increased to 11.1 per cent from 9.4 per cent, Egypt’s share increased to 1.4 per cent from 0.3 per cent, Nigeria's share increased to 3.3 per cent from 2.2 per cent and Libya’s share increased to 0.5 per cent from 0.1 per cent.

A notable increase in the diversity of countries from which India imports crude oil has been observed. In FY26 (April-November), crude oil imports from Libya, Egypt, Brazil, the US and Brunei increased significantly compared to the same period in FY25, while those from Russia, Saudi Arabia, Iraq and Venezuela declined.

India’s inflation rate – headline and core excluding precious metals – will likely be higher in FY27 than in FY26. However, we believe it is unlikely to be a concern, the Economic Survey 2025-26 said. The Survey highlighted that headline inflation has already moderated sharply in the current fiscal and is projected to stay within the Reserve Bank of India’s target band of 4% ±2% over the medium term. Read here

There has been progress in the negotiations of the trade deal between the two countries (India and US). While there has been some specific impact of the tariffs, there has been resilience of India’s overall exports in some labour-intensive and small-scale sectors, primarily attributed to diversification towards alternative destinations, the document said.

The Centre has progressively scaled up capital expenditure from an average of 1.7 per cent of GDP in the pre-pandemic period to an average of 2.9 per cent of GDP in the years after the pandemic. At the same time, effective capex, a broader measure which includes capital expenditure along with grants-in-aid for the creation of capital assets, increased from an average of 2.7 per cent of GDP to 3.9 per cent of GDP over the same period, and further to 4 percent in FY25 (PA).

Fiscal deficit declined from 9.2 per cent of GDP in FY21 to 4.8 per cent of GDP in FY25 [Provisional Accounts, (PA)] and is budgeted at 4.4 per cent of GDP in FY26. Over the same period, the revenue deficit as a proportion of GDP has narrowed steadily, reaching its lowest level since FY09, thereby leaving a greater allocation for capex and reflecting a sustained improvement in the quality of expenditure.

India’s external sector is placed comfortably in the short run. Forex reserves cover over 11 months of imports as of 16 January 2026 and approximately 94.0 per cent of the external debt outstanding as of the end of September 2025, offering a comfortable liquidity cushion, the Survey document said.

Merchandise imports for April-December 2025 increased by 5.9 per cent. Following the trends in previous years, the rise in merchandise trade deficit has been counterbalanced by an increase in services trade surplus, while the growth in remittances has bolstered this balance (Chart I.25). In most years, remittances have surpassed gross FDI inflows, underscoring their importance as a key source of external funding. As a result, the current account deficit remains moderate at 0.8 per cent of GDP in H1 FY26.

Against a backdrop of global trade uncertainty, India’s total exports (merchandise and services) reached a record USD 825.3 billion in FY25, with continued momentum in FY26. Despite heightened tariffs imposed by the United States, merchandise exports grew by 2.4 per cent (April–December 2025), while services exports increased by 6.5 per cent, the government said in the Economic Survey.

Globally, the shift from aggressive monetary policy tightening to a neutral or accommodative stance is still underway. However, the variance in growth-inflation dynamics has led to divergent trajectories of central bank policy rates across these economies. This has implications for capital flows as fund houses trot the globe in search of higher yields, the government said under the Economic Survey 2025-26.

The Indian economy has maintained strong growth momentum in FY26. The First Advance Estimates place real GDP growth at 7.4 per cent, with growth largely driven by domestic demand. Private consumption and capital formation continue to support expansion, while services remain the key contributor on the supply side. Manufacturing activity has strengthened, and agriculture has provided stability, notwithstanding structural constraints, Survey said.

The global economic environment remains uncertain, shaped by geopolitical tensions, trade disruptions, and divergent growth and inflation outcomes across major economies. While global activity has shown resilience in the near term, underlying vulnerabilities persist, including elevated fiscal pressures, fragmented supply chains, and an increased reliance on economic policy instruments for strategic purposes, said Economic Survey 2026.

The Indian economy is expected to expand at 6.8%-7.2% in FY27, supported by strong macro fundamentals and a series of regulatory reforms, the Economic Survey 2025-26 said, laying out a strategic vision for navigating a global economy strained by a tougher US tariff regime.

FM Nirmala Sitharaman tables Economic Survey 2025-2026 in Parliament.

The Economic Survey typically reviews key macroeconomic indicators, including GDP growth trends, inflation and monetary policy, the government’s fiscal position, and the performance of the external sector. It also assesses social indicators such as employment, health and education, alongside special chapters focused on emerging and structural themes.

Presented ahead of the Union Budget, the Survey sets the tone for the government’s economic thinking and provides a comprehensive snapshot of India’s financial position before new policy measures are announced.

The Indian stock market traded lower ahead of the release of the Economic Survey 2026. The Sensex fell 308.21 points, or 0.37%, to 82,036.47, while the Nifty 50 traded at 25,258.10, down 84.65 points, or 0.33%.

Prime Minister Narendra Modi hailed the recently concluded India-EU Free Trade Agreement (FTA).

“At the very beginning of this quarter, the India–European Union Free Trade Agreement reflects how bright the coming direction is and how promising the future of India's youth is. This is free trade for an ambitious India, for aspirational youth, and for a self-reliant India. I am confident that Indian manufacturers, in particular, will use this opportunity to enhance their capabilities,” he said, adding that a new market has opened up, offering quality products to 27 EU member nations.

The Economic Survey’s assessment of exports and the external sector will be viewed against a volatile global backdrop. Uncertainty surrounding global growth, trade restrictions and tariff-related risks continues to weigh on India’s export outlook, even as services exports remain a relative bright spot, according to Reuters. Market participants will closely watch the Survey’s commentary on trade-related risks, current account dynamics and the adequacy of external buffers.

This will be Nirmala Sitharaman’s record ninth consecutive Budget, expected to include reform measures to shore up economic growth amid a volatile geopolitical situation.

Budget 2026 is expected to prioritise India’s long-term growth and global positioning through targeted allocations across key sectors. Areas likely to be in focus include railways, infrastructure, urban development, manufacturing, automobiles, defence, electronics, MSMEs, renewable energy and artificial intelligence.

In addition, sectors such as healthcare, tourism, agriculture and logistics are also expected to receive meaningful budgetary support aimed at improving efficiency, competitiveness and overall economic resilience.

Budget 2026: Key dates

28 January: The Budget Session will commence at the Parliament with a joint address by President Droupadi Murmu to both the Houses.

29 January: According to the provisional calendar issued by the Lok Sabha Secretariat, the House will also meet on this day.

29 January: Around 11 am -12 pm, CEA V Anantha Nageswaran is expected to present the Economic Survey on this day.

1 February: The finance minister will present the Budget 2026 at 11 AM at the Lok Sabha.

13 February: The first half of the Budget Session ends.

9 March: The second half of the Budget Session will begin on this day.

2 April: The final day of the Budget Session, after which Lok Sabha and Rajya Sabha will be adjourned sine die.

Prime Minister Narendra Modi said on Thursday that India was already onboard the reform express while hailing the recently sealed India-EU Free Trade Agreement (FTA). “This government has been identified with Reform, Perform, and Transform. And now we have boarded the Reform Express,” the PM Modi said in remarks at the beginning of the Budget Session of Parliament in New Delhi on 29 January.