The Economic Survey 2025-26 presented by Finance Minister Nirmala Sitharaman in Parliament on Thursday projects India’s GDP to grow by 6.8%–7.2% in FY27, maintaining its status as the fastest-growing major economy. Key drivers include strong manufacturing (7.7%-9.1% growth in H1FY26), a 4.4% fiscal deficit target, and robust domestic demand. Real GDP is projected to grow in FY27, following a strong performance in FY26, driven by structural reforms, industrial capacity expansion, and high domestic consumption.
Also, Manufacturing Gross Value Added (GVA) grew by 7.72% and 9.13% in Q1 and Q2 of FY26, respectively. Medium and high-technology activities now account for 46.3% of total manufacturing value added. The survey also confirms a 4.4% fiscal deficit target for FY26, achieved through strategic public investment and consolidation. Gross Fixed Capital Formation (GFCF) remains stable, supported by sustained public capital expenditure and a revival in private investment.
It may be noted that the coming budget will largely focus on further accelerating the growth and correcting whatever shortcomings there are in the tax and administrative structures so that performance is improved. As such, the total picture will become clear after the budget is announced. Of course, in that, while the economic reality is a given, the political element also plays a major part, so the survey cannot be entirely described as an indicator of things to come.
Significantly, the services sector continues to be a major growth driver, with India ranking 7th in global services exports. This has been India’s strength in coping with the increasingly volatile conditions across the world due to wars and other rivalries. Importantly, the survey highlights the need for a “marathon and sprint” approach, emphasising policy credibility, administrative discipline, and strengthening domestic capacity to boost global competitiveness. In this context, it is expected that key concerns including geopolitical conflicts, volatile global energy/finance markets, and potential export controls on technology will be addressed.
The government will come in for criticism from the opposition for the low value of the rupee against the dollar, claiming it to be an indicator of a dismal economic reality. While India’s foreign exchange reserves are healthy, it is a fact that foreign investors have been reluctant to bring in money because of international political volatility. The recent FTA with the EU will act as a booster but not as quickly as may be desired. Hopefully, if a firm agreement is arrived at regarding tariffs with the US, stability will be restored. Overall, however, domestically the economic indicators continue to remain strong.
