What Survey tells us about the economy

Every year, just before the Union Budget , the Government of India places b efore Parliament a document that rarely attracts the attention it deserves—the Economic Survey. The Economic Survey 2026, tabled ahead of the February 1 Budget, reviews the performance of the Indian economy during the current financial year (2025–26) and sets the analytical foundation for policy decisions in the year ahead.

It is important to clarify a common misunderstanding. While the Budget outlines government plans for the upcoming financial year (2026–27), the Economic Survey evaluates the economy as it stands today. It is diagnostic, not declarative. The recommendations within it are advisory, not binding – but historically, they shape policy thinking in subtle yet significant ways. The Survey opens with a sober assessment of the global economy. Trade tariffs, geopolitical conflicts, export controls on technology, and competition over critical minerals have intensified uncertainty worldwide.

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The era of predictable globalisation appears to be over. Yet, amid this turbulence, India has displayed notable resilience. Fiscal discipline has improved steadily since the pandemic. The fiscal deficit, which ballooned to over 9 per cent of GDP during Covid-19, has been brought down to around 4.4 per cent in 2025–26, with further consolidation expected. Equally significant is the improvement in India’s primary deficit and sovereign credibility. International credit rating agencies have responded positively, reflecting confidence in India’s macroeconomic management.

The Survey projects India’s real GDP growth for 2026–27 in the range of 6.8 to 7.2 per cent, while growth in the current year is estimated at around 7.4 per cent – higher than earlier expectations. Private consumption and investment remain the primary drivers of growth. Gross Value Added (GVA), which captures the supply-side contribution of agriculture, industry, and services, is expected to grow at about 7.3 per cent in 2025–26. This suggests broad-based economic momentum rather than growth concentrated in a single sector.

One of the Survey’s most striking observations is India’s success in managing inflation. Headline inflation during the year has been among the lowest globally. Food inflation, particularly in vegetables and pulses, has turned negative – an outcome attributed to timely government interventions and better supply management. While core inflation remains elevated due to rising gold and silver prices, the overall inflation trajectory remains under control. The Survey does caution that inflationary pressures could rise modestly in 2026–27 due to a weaker rupee and global uncertainties, but it expresses confidence in India’s macroeconomic buffers. India’s banking sector, once b urdene d by double – digit non-performing assets, has undergone a remarkable turnaround.

Gross NPAs have declined to nearly 2.2 per cent, enabling banks to expand credit, particularly to MSMEs. Credit transmission from the Reserve Bank of India’s policy rates to lending rates has improved, and pension and insurance coverage has expanded rapidly. Schemes such as the Atal Pension Yojana and National Pension System now cover hundreds of millions of subscribers, reducing long-term social vulnerability. India continues to run a trade deficit in goods, driven by higher imports, but this is partially offset by a strong surplus in services exports and robust remittances.

As a result, the current account deficit has narrowed to around 0.8 per cent of GDP, a comfortable level by global standards. The Survey highlights India’s growing role in digital and services exports, while also emphasising the need to deepen trade agreements and make manufacturing more competitive. India’s foreign exchange reserves, now exceeding $700 billion, provide a strong external buffer. Public capital expenditure has emerged as a key growth engine. Government spending on infrastructure – roads, railways, ports, power, and digital connectivity – has increased more than fourfold over the past decade.

Manufacturing has benefited from structural reforms, rising production in electronics, pharmaceuticals, automobiles, and steel, and increasing participation in medium- and high-technology sectors. However, the Survey acknowledges that sustaining this momentum will require private investment to play a larger role. A notable shift in the Survey is its pragmatic assessment of renewable energy. While reaffirming India’s climate commitments, it recognises the material, financial, and land constraints of scaling renewables alone. Nuclear energy is presented as a crucial complement – capable of providing stable, low-carbon, round-the-clock power for industry and urbanisation.

Education, health, and skilling are framed as economic imperatives rather than social expenditures. The Survey notes improvements in enrolment, life expectancy, nutrition, and labour participation – particularly among women. At the same time, it raises difficult questions about artificial intelligence: productivity versus employment, scale versus inclusion, proprietary models versus open innovation. These are choices India must confront proactively. Urbanisation, too, is identified as both an opportunity and a challenge. Congestion, pollution, and mobility losses impose heavy economic costs, underscoring the need for better public transport, urban planning, and civic behaviour.

The Economic Survey 2026 does not offer easy answers. Instead, it provides a clear-eyed assessment of India’s strengths, vulnerabilities, and trade-offs. Its true value lies not in predicting Budget announcements, but in shaping how India thinks about growth, resilience , and long- t e r m development. For policymakers, scholars, students, and citizens alike, the Survey is not just a pre-Budget ritual – it is a roadmap worth reading carefully.

(The writer is director-Mrikal (AI/Data Center) and a young alumni member, Government Liaison Task Force, IIT Kharagpur.)