The Economic Survey 2025–26

The Economic Survey 2025–26

1. Strategic Reorientation of Economic Thinking

The Economic Survey 2025–26 marks an important shift in India’s economic policy framework by moving beyond short-term macroeconomic management toward a strategy focused on strategic resilience and strategic indispensability. In an increasingly fragmented global order marked by geopolitical tensions and economic coercion, the Survey argues that macroeconomic stability alone cannot secure national prosperity. India must convert its economic scale into strategic capability. To describe this challenge, the Survey uses the metaphor of “running a marathon and a sprint simultaneously.” The marathon represents long-term structural reforms such as improving state capacity, strengthening institutions, and building manufacturing competitiveness, while the sprint refers to the need for quick responses to short-term shocks such as volatile capital flows, trade disruptions, and geopolitical crises. The Survey also introduces a normative framework drawn from Indian philosophical thought—preferring Śreya (long-term good) over Preya (short-term gratification)—to emphasise that economic policy should prioritise sustainable structural transformation over populist measures.

1. Growth Outlook and Economic Momentum

India’s economic outlook remains robust, with real GDP growth projected at over 7 percent for FY 2025–26, and the momentum expected to continue into FY 2026–27. Importantly, the Survey revises India’s potential growth rate upward from 6.5 percent to around 7 percent, indicating that growth is being supported by structural improvements rather than temporary cyclical factors. This stronger outlook is attributed to sustained public investment in infrastructure, supply-side reforms, improvements in logistics efficiency, and stronger industrial and services activity. High-frequency economic indicators also point to resilient private consumption, increasing investment activity, and strong performance in the services sector. Together, these factors suggest that India’s growth trajectory is becoming broad-based and structurally durable, positioning the economy for sustained expansion.

1. Strength of Macroeconomic Fundamentals