The Economic Survey of India 2025-26 was tabled in Parliament on January 29, 2026 by Union Finance Minister Nirmala Sitharaman. The Survey assesses macroeconomic performance, structural reforms, and medium-term challenges ahead of the Union Budget 2026-27, against a backdrop of global uncertainty and domestic resilience.
1. State of the Economy: Growth with Resilience
The Survey notes that the global macroeconomic environment remains fragile, characterised by geopolitical tensions, trade fragmentation, and financial vulnerabilities that could manifest with time lags.
Against this backdrop, India’s macroeconomic performance remains comparatively strong:
- Real GDP growth (FY26, First Advance Estimates): 7.4%
- Gross Value Added (GVA) growth: 7.3%
India continues to be the fastest-growing major economy for the fourth consecutive year, supported by domestic demand and services-led expansion.
2. Demand Conditions: Consumption and Investment
Private Consumption
- Private Final Consumption Expenditure (PFCE) grew 7.0% in FY 2025-26.
- PFCE constituted 61.5% of GDP, matching the highest level recorded since FY 2011-12.
- Consumption growth was supported by:
- easing inflation,
- stable employment conditions,
- rising real purchasing power.
Rural demand benefited from strong agricultural output, while urban consumption improved with tax rationalisation and moderation in price pressures.
Investment
- Gross Fixed Capital Formation (GFCF) expanded by 7.8%, maintaining a stable 30% share of GDP.
- Investment momentum was driven primarily by:
- sustained public capital expenditure, and
- early signs of revival in private sector investment, reflected in corporate announcements.
3. Supply-Side Dynamics: Services Lead Growth
- Services remained the principal growth driver:
- Services GVA growth (H1 FY 2025-26): 9.3%
- Estimated full-year growth: 9.1%
The Survey notes that services expansion is broad-based, reflecting strength in modern, tradable, and digitally delivered services.
4. Fiscal Developments: Credibility and Consolidation
Revenue Trends
- Centre’s revenue receipts improved from an average ~8.5% of GDP (FY 2015-16 to FY 2019-20) to 9.2% of GDP in FY 2024-25 (PA).
- Growth was led by non-corporate income tax, which rose from ~2.4% of GDP pre-pandemic to ~3.3% post-pandemic.
Tax Base Expansion
- Income-tax return filings increased from 6.9 crore (FY 2021-22) to 9.2 crore (FY 2024-25), reflecting:
- improved compliance,
- digitalisation of tax administration, and
- rising formal incomes.
GST Performance
- Gross GST collections (April-December 2025): ₹17.4 lakh crore
- Year-on-year growth: 6.7%, broadly aligned with nominal GDP growth.
- High-frequency indicators point to robust activity:
- E-way bill volumes grew 21% YoY during the same period.
5. Public Expenditure and Debt Dynamics
- Effective capital expenditure of the Centre rose to ~4% of GDP in FY 2024-25, compared to a pre-pandemic average of ~2.7%.
- Through Special Assistance to States for Capital Expenditure, states maintained capex at around 2.4% of GDP.
- State fiscal deficit edged up to 3.2% of GDP in FY 2024-25, reflecting rising expenditure pressures.
- General government debt-to-GDP ratio declined by ~7.1 percentage points since 2020, despite elevated public investment.
6. Monetary and Financial Sector: Stability and Inclusion
Banking Sector
- Gross NPA ratio (SCBs, Sept 2025): 2.2%
- Net NPA ratio: 0.5%, both at multi-decadal lows.
- Credit growth accelerated to 14.5% YoY by December 2025.
Financial Inclusion
- PM Jan Dhan Yojana: 55.02 crore accounts.
- PM Mudra Yojana: ₹36.18 lakh crore disbursed across 55.45 crore loan accounts.
- Demat accounts exceeded 21.6 crore, with women comprising nearly one-fourth of new investors.
Regulatory Assessment
- The IMF-World Bank FSAP 2025 recognised India’s financial system as resilient, diversified, and adequately capitalised under stress scenarios.
7. External Sector: Diversification and Buffers
- India’s share in global merchandise exports rose from 1% (2005) to 1.8% (2024).
- Services exports share more than doubled to 4.3%.
- Total exports (FY 2024-25): USD 825.3 billion.
- Services exports reached USD 387.6 billion, growing 13.6%.
- Current Account Deficit (Q2 FY 2025-26): ~1.3% of GDP.
- Foreign exchange reserves stood at USD 701.4 billion (January 2026), covering ~11 months of imports.
- Remittances reached USD 135.4 billion, the highest globally.
8. Inflation: Anchored at Historic Lows
- Average CPI inflation (April-December 2025): 1.7%, the lowest since the CPI series began.
- Decline driven primarily by moderation in food and fuel prices.
- Among EMDEs, India recorded one of the sharpest disinflation episodes in 2025.
9. Agriculture and Food Management
- Foodgrain production (AY 2024-25): 3,577.3 LMT, a record high.
- Horticulture production (362.08 MT) exceeded foodgrain output, highlighting diversification.
- Livestock GVA rose nearly 195% between FY 2014-15 and FY 2023-24.
- PM-KISAN disbursed ₹4.09 lakh crore across 21 instalments.
- e-NAM onboarded 1.79 crore farmers across 1,522 mandis.
10. Industry, Infrastructure, and Innovation
- Industry GVA growth (H1 FY 2025-26): 7.0%.
- Manufacturing GVA accelerated in Q1 and Q2 FY 2025-26.
- PLI schemes attracted over ₹2 lakh crore in investment, generating 12.6 lakh jobs.
- India’s Global Innovation Index rank improved to 38th.
- Renewable energy accounts for nearly 50% of installed power capacity.
11. Social Sector: Education, Health, Employment
- India’s school system serves 24.69 crore students.
- Higher education institutions increased to 70,018.
- Maternal mortality declined 86% since 1990.
- Employment reached 56.2 crore in Q2 FY 2025-26.
- e-Shram portal registered over 31 crore unorganised workers, with women forming a majority.
12. Strategic Direction: From Swadeshi to Strategic Indispensability
The Survey calls for disciplined indigenisation, distinguishing between:
- critical strategic vulnerabilities,
- economically viable domestic capabilities, and
- areas where import substitution is inefficient.
The objective is a transition from import substitution to strategic resilience and global indispensability, embedding India deeper into global value chains.
Concluding Assessment
The Economic Survey 2025-26 presents India as a high-growth, fiscally credible, and structurally reforming economy, navigating global uncertainty through domestic demand, investment-led growth, and institutional strengthening. It provides the analytical foundation for Budget 2026-27, signalling continuity with calibrated reform rather than abrupt shifts.
Reference: PIB
Source: Economic Survey of India 2025-26 dated 29/01/2026