India’s latest Economic Survey presents an economy supported by domestic strength even as global uncertainty continues. It projects real GDP growth of 7.4% for FY26, driven by solid consumption and services activity, while Gross Value Added growth is estimated at 7.3%. Looking ahead, growth for FY27 is projected in the range of 6.8% to 7.2%, with the outlook described as cautious but stable amid external risks.
The Survey highlights domestic demand as the main growth engine. Private consumption improved during FY26, helped by easing inflation, stable jobs and better purchasing power. Rural demand benefited from healthy agricultural output, while urban spending gained from tax rationalisation and services sector expansion. Investment momentum remained intact, with public capital expenditure crowding in private investment. The services sector continued to lead growth and now contributes over half of India’s GDP, reinforcing its long term structural role.
Inflation trends remained favourable, with headline CPI inflation averaging around 1.7% during April to December FY26 due to lower food prices, especially vegetables and pulses. Core inflation showed some stickiness but was partly driven by precious metals prices. In response, the Reserve Bank of India reduced the repo rate by a cumulative 125 basis points since February 2025 and cut the CRR by 100 basis points, alongside liquidity measures. Lending rates eased, improving monetary transmission. On the fiscal side, the Centre reaffirmed its FY26 fiscal deficit target of 4.4% of GDP, while effective capital expenditure rose close to 4% of GDP. Revenue receipts improved and India’s sovereign credit profile strengthened during the year.
The banking system showed strong health, with Gross Non Performing Assets falling to about 2.2% in September 2025 and credit growth staying in double digits. Financial inclusion expanded, with over 55 crore PMJDY accounts, an RBI Financial Inclusion Index of 67.0 and wider insurance and pension coverage, including gig workers. Externally, comfortable forex reserves, services exports and remittances provided buffers against volatility. The Survey also flagged risks from trade conflicts, commodity prices, geopolitical tensions and AI driven asset corrections, noting these as external challenges rather than immediate threats to India’s growth momentum.
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