New Delhi: India’s economy is transitioning towards a high-growth and resilient phase, backed by stable macro fundamentals, broad-based demand and easing inflation, the Economic Survey 2025-26 said on Friday. The survey projected real GDP growth of 7.4% in FY26 and gross value added (GVA) growth of 7.3%, even as the global environment remains challenging.
Inflation has moderated sharply, with April–December 2025 average headline inflation at 1.7%, the lowest since the CPI series began, helped by a broad-based disinflation in food and fuel prices. Among major emerging markets, India has seen one of the steepest declines in inflation over the past year, the survey noted. The Reserve Bank of India has cut rates and injected liquidity to support growth, keeping financial conditions accommodative.
Growth is being driven by all three major sectors. Agriculture is estimated to expand 3.1% in FY26 on the back of a favourable monsoon, supporting rural demand. Industry is projected to grow 6.2%, with manufacturing showing a sharp pick-up, aided by government-led initiatives such as the production-linked incentive (PLI) schemes. Services, the largest contributor, is estimated to grow 9.1%, taking its share in GDP to more than half.
The labour market has also shown resilience, with employment rising in Q2 FY26 and the unemployment rate easing to 4.8% in December 2025. The survey pointed to improving participation, especially among women, and continued formal job creation in organised manufacturing.
On the external front, exports hit record levels in FY25, led by services, while foreign exchange reserves stood at over $700 billion in mid-January 2026, providing a strong buffer against global shocks. Fiscal metrics have improved as well, with higher revenue receipts, a rising share of direct taxes and sustained capital expenditure supporting growth without undermining stability.
The Survey concluded that India’s macroeconomic trajectory in FY26 reflects a balance between stability and momentum, but cautioned that sustaining the growth impulse will require continued policy support, reforms and investment to navigate an uncertain global backdrop.