India’s GDP growth for the financial year 2025-26 (FY26) is projected to be between 6.3% and 6.8%, according to the Economic Survey 2024-25. This projection suggests that economic growth may remain slow in the coming year. The report, presented in Parliament by Finance Minister Nirmala Sitharaman, highlights key aspects of India’s economic performance, emphasizing the robustness of the domestic economy despite external uncertainties.
The Economic Survey states that the fundamentals of the domestic economy remain strong, supported by a stable external account, calibrated fiscal consolidation, and steady private consumption. These factors collectively provide a foundation for sustained economic growth. However, despite these strengths, certain challenges persist, particularly in the manufacturing sector, which has been under pressure due to weak global demand and seasonal conditions affecting domestic production.
Private consumption has remained stable, reflecting steady domestic demand. The survey attributes this to strong household spending patterns, buoyed by rising incomes, urbanization, and increasing consumer confidence. Additionally, fiscal discipline and a favorable external balance, supported by a services trade surplus and healthy remittance growth, have contributed to macroeconomic stability. These factors have created an environment conducive to continued economic expansion, even in the face of global headwinds.
One of the major concerns highlighted in the survey is food inflation, which has been a pressing issue in recent months. However, the report provides a cautiously optimistic outlook, suggesting that inflationary pressures are expected to ease in the last quarter of FY25. This anticipated decline will be driven by a seasonal drop in vegetable prices and the arrival of the kharif harvest, which should help stabilize food costs. Furthermore, the outlook for the rabi crop in the first half of FY26 is positive, with expectations of a strong yield that could further keep food prices in check. This would provide significant relief to consumers, particularly in rural areas where food inflation has a more pronounced impact.
The survey also underscores the importance of rural demand as a driver of economic growth. With agricultural production expected to rebound and food inflation likely to soften, rural consumption is projected to strengthen in the near term. A stable macroeconomic environment, along with policy measures aimed at supporting agricultural productivity, is expected to further bolster rural spending, thereby adding to overall economic momentum.
While the domestic economy exhibits resilience, the survey acknowledges that geopolitical and trade uncertainties remain key risks. Global economic volatility, shifting trade dynamics, and potential commodity price shocks could pose challenges to India’s growth trajectory. The survey emphasizes the need for continuous policy vigilance to mitigate these risks and maintain economic stability.
Investment activity, which has shown signs of slowing down, is another area of focus in the survey. Despite the recent moderation in investment growth, the report describes this decline as temporary and expects a revival in the near future. Various factors, including policy support, improving business sentiment, and sustained public infrastructure spending, are likely to contribute to an uptick in investment activity. The government’s commitment to structural reforms and ease-of-doing-business initiatives is expected to enhance investor confidence, driving both domestic and foreign direct investment.
The Economic Survey points out that domestic investment and output growth trends are showing signs of resilience. In addition, the ongoing disinflation process is expected to support overall economic stability. A favorable policy environment, coupled with improving credit availability, could provide further impetus to investment-led growth in FY26.
India’s economic fundamentals remain strong, with key indicators reflecting stability and growth potential. The survey highlights a well-capitalized financial system, improving infrastructure, and strategic government policies aimed at enhancing productivity and competitiveness. The country’s financial sector continues to be a pillar of strength, with robust banking operations and healthy credit growth supporting business expansion and consumer spending.
Infrastructure development remains a key focus area for the government, with significant investments being channeled into transportation, energy, and digital connectivity. These investments are expected to enhance efficiency, reduce logistical costs, and create new economic opportunities across various sectors. The expansion of road networks, modernization of railway infrastructure, and development of smart cities are some of the initiatives that are set to contribute to long-term economic growth.
Government policies aimed at fostering innovation, entrepreneurship, and digital transformation are also playing a crucial role in shaping India’s economic landscape. The adoption of technology-driven solutions in sectors such as manufacturing, services, and agriculture is expected to improve productivity and drive higher economic output. With the growing influence of the digital economy, businesses are increasingly leveraging technology to enhance operational efficiency and expand market reach.
As the global economic environment continues to evolve, India’s ability to navigate uncertainties will be critical in determining its growth trajectory. The survey emphasizes the importance of policy agility and proactive economic management in addressing emerging challenges. Strengthening trade partnerships, diversifying export markets, and enhancing domestic production capabilities will be key to sustaining long-term growth.
The report also underscores the significance of maintaining macroeconomic stability, with controlled inflation, fiscal prudence, and external resilience forming the cornerstone of India’s economic strategy. The government’s focus on fiscal consolidation, while ensuring targeted support for priority sectors, is expected to enhance economic resilience and reduce vulnerabilities.
Looking ahead, India’s economic prospects remain positive, with a balanced mix of structural reforms, policy support, and strong domestic demand providing a solid foundation for sustained growth. While challenges such as global economic headwinds, trade uncertainties, and inflationary pressures persist, the country’s robust economic fundamentals position it well to navigate these obstacles.
The Economic Survey concludes on an optimistic note, reiterating confidence in India’s growth potential. With steady private consumption, controlled inflation, and improving investment activity, the economy is expected to maintain its upward trajectory. Policymakers will continue to play a crucial role in ensuring that the growth momentum is sustained, with a focus on inclusive development, infrastructure expansion, and technological advancement. By leveraging its inherent strengths and addressing potential risks proactively, India is well-positioned to achieve its growth targets for FY26 and beyond.