Indian Millennial: Economic Survey 2025 26

Thursday, February 05, 2026

The following text is a reproduction of the key findings and sections from the Economic Survey 2025-26 as summarized in the sources:

The Economic Survey 2025-26 was tabled in Parliament by Finance Minister Ms. Nirmala Sitharaman on January 29, 2026.

GDP Growth: Real GDP growth for 2026-27 is projected to be between 6.8% and 7.2%. For 2025-26, the growth is estimated at 7.4%, a significant increase from 6.5% in the previous year. This growth is largely driven by domestic demand, with private final consumption expenditure reaching 61.5%, its highest level since 2011-12.
Inflation: Retail inflation declined to 1.7% in 2025-26 (April-December), down from 4.6% in 2024-25. This decline, driven by lower food prices, has improved real purchasing power. However, the RBI and IMF project a gradual increase in inflation for 2026-27.
External Sector: The current account deficit (CAD) was 0.8% of GDP in the first half of 2025-26. FDI inflows reached USD 81 billion in 2025, which is 13% higher than the previous year, though the Survey noted they remain below potential. As of mid-January 2026, forex reserves covered about 11 months of imports.

Fiscal Deficit: The central government is estimated to keep the fiscal deficit below 4.5% of GDP for 2025-26.
Debt Policy: The government has shifted to targeting the debt-to-GDP ratio until 2031 rather than following annual fiscal deficit targets, allowing for policy flexibility in an uncertain global environment. A return to a rule-based regime (targeting 3% deficit and 50% debt) may be considered after 2031.
State Finances: The aggregate fiscal deficit of states rose to 3.2% of GDP in 2024-25, with only 11 states recording a revenue surplus.

Agriculture: This sector recorded its highest decadal growth (4.5%) between 2015-16 and 2024-25. While livestock and fishing showed strong performance, crop yields remain constrained by structural gaps like fragmented landholdings.
Industry: Growth reached 7% in the first half of 2025-26. The Survey highlighted that national R&D expenditure at 0.64% of GDP is insufficient and noted that the business sector's contribution to R&D (41%) is low compared to peers like China (77%).
Services: Accounting for 54% of GDP, the sector grew by 9% in early 2025-26. Emerging opportunities were identified in data centres, niche tourism, and space and ocean services.

Labor Indicators: The unemployment rate fell to 3.2% in 2023-24, and female labor force participation increased to 42%.
Gig Workers: Currently representing 2% of the workforce, gig workers are projected to reach 6.7% by 2029-30. The Survey emphasized the need for better social security and income support for these workers.

AI Adoption: The Survey recommended that India focus on application-led innovation and human capital rather than replicating frontier-scale models.
Climate Change: Roadblocks include a lack of critical minerals and storage systems, with climate finance remaining a "binding constraint".
Urbanisation: Institutional issues such as fragmented municipal governance and limited fiscal autonomy persist. The Survey suggests unlocking land through clearer titles and transit-oriented development.

Famous quotes