New Delhi, Jan 29 (PTI) — India’s economy is on a stable footing and is likely to expand between 6.8 and 7.2 per cent in the next fiscal, according to the Economic Survey 2025-26 tabled in Parliament on Thursday. The projection comes amid the cumulative impact of structural reforms and robust macroeconomic fundamentals, though slightly lower than the estimated 7.4 per cent growth in the current fiscal.
The Survey highlighted that the rupee’s recent depreciation does not reflect the strength of India’s economy. “The rupee is punching below its weight. While an undervalued rupee offsets some impact of higher American tariffs on Indian goods, it also causes investors to pause,” it said, stressing that a stable currency remains key to achieving India’s global ambitions.
Prepared by a team led by Chief Economic Advisor V Anantha Nageswaran, the document noted that India is relatively better placed than many countries due to strong macro fundamentals. The cumulative impact of policy reforms over recent years is lifting India’s medium-term growth potential close to 7 per cent, while underscoring the need for deeper institutional capacity in a geopolitically complex world.
The Survey stressed that India must prioritise domestic growth, maintain buffers, and ensure liquidity amid global uncertainties that continue to reshape investment, supply chains, and economic prospects. Core inflation remains subdued, reflecting strengthening supply-side conditions, it said.
Fiscal consolidation is on track, with the central government targeting a fiscal deficit of 4.4 per cent of GDP in 2025-26. As of November 2025, the deficit stood at 62.3 per cent of Budget Estimates. The Survey noted that markets have rewarded India’s fiscal discipline through lower sovereign bond yields.
Despite higher US tariffs, merchandise exports grew by 2.4 per cent and services exports by 6.5 per cent during April–December 2025, while merchandise imports rose 5.9 per cent. GST reforms and other measures have helped convert global uncertainty into an opportunity, preparing the economy for a year of adjustment in FY27.
The Survey highlighted India’s growing role in global trade, including the potential of free trade agreements. The proposed FTA with Europe, it said, will boost manufacturing competitiveness, export resilience, and strategic capacity. Remittances continue to outpace FDI inflows in most years, keeping the current account deficit moderate at 0.8 per cent of GDP in H1 FY26.
The Survey also delved into emerging sectors, noting that India’s aviation industry is on a sustained growth path, becoming the world’s third-largest domestic market. It called for policies to reshape work terms for gig workers and cautioned that overly optimistic AI-driven asset valuations may need correction if anticipated productivity gains do not materialise.
On global engagement, the Survey said India has an opportunity to shape the international order amid multiple uncertainties, asserting that there is “no space for pessimism, but vigilance is essential.”
PTI
Category: Breaking News
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