Economic Survey: Pivots, Paradoxes, and Policy Questions

The Economic Survey is a composite document — it balances current economic realities with forward-looking aspirations, policy choices, and contingent possibilities.

Here’s a selective engagement with a few crisp sections of the Economic Survey – that either signal a pivot in policy thinking or offer food for thought for economic stakeholders. These are not necessarily consensus positions. The views expressed below are strictly personal.

   1. “In response (to global uncertainties and shifting trade order) India needs to generate sufficient investor interest and export earnings in foreign currency to cover its rising import bill, as, regardless of the success of indigenisation efforts, rising imports will invariably accompany rising incomes. This has been the historical global experience”

The Survey’s renewed emphasis on exports as a growth engine is noteworthy, especially in a world that had turned more protectionist. For several years, mainstream economic commentary had tacitly accepted that India may have missed the bus for an export-led growth trajectory that was followed by the East Asian economies. Yet, in a world marked by the erosion of rules-based trade and the emergence of a fragmented global trading system, the question merits reconsideration: can exports become a potent driver of India’s growth? The proposition deserves serious policy attention, as thought-through and coherent policy actions may deliver results.

   2. “The appropriate stance for 2026 is therefore one of strategic sobriety rather than defensive pessimism”

Clearly, the idea is not to get bogged down by external developments, excessively. Yes, global tariff escalation will undoubtedly have implications, but by maintaining calm, can India do better? I think the longer-than-anticipated wait for the US-India trade deal is a case in point. A no-rush approach, resisting external pressure, may ultimately strengthen India’s negotiating position.

    3. “India’s long-run challenge, therefore, is not merely to manage liquidity or credit cycles, but to transform itself into a surplus-generating economy. Only then can its cost of capital fall durably”

This is one of the Survey’s most compelling propositions. It not only reaffirms exports as a growth driver, but also goes further by envisaging the possibility of a trade surplus for India. Should India succeed in this transition, it would represent a decisive structural break from its post-independence economic trajectory and fundamentally alter the playbook for growth and macroeconomic stability here on.

    4.“International experience indicates that while service exports are economically valuable, they do not systematically compel broad upgrades in state capacity, as successful firms can bypass weak institutions, relocate easily, and generate limited economy-wide pressure on governments to reform. Unlike manufacturing exports, they do not impose hard fiscal, employment, or logistical constraints on the State, allowing institutional weakness to persist even alongside globally competitive firms. So, manufacturing matters”

This argument merits deeper reflection. It extends beyond exports to domestic output in a broader sense. I have long argued for the centrality of services in India’s growth story (given their pace of growth, contribution to growth, exports, and employment). At the same time, the traditional case for manufacturing-led growth, often justified by job intensity, is less persuasive today in an era of automation and rising capital intensity.

Yet the Survey’s institutional argument is powerful. Services, particularly new-age services, often scale rapidly in institutional vacuums, exerting minimal pressure on the State. This raises a deeper question: did India’s relatively swift transition from an agrarian economy to a services-led one weaken incentives for institutional strengthening? If so, renewed emphasis on manufacturing may be warranted precisely because the State’s role becomes more decisive. In fact, the survey moots the idea of an ‘entrepreneurial state’ – i.e., a state which acts entrepreneurial in its policymaking. 

   5. “In that sense (from perspective of industrial policy), decisions about what not to protect can be as important as decisions about what to support”

This insight follows naturally from the preceding discussion. If the State is to intervene, it must do so with clarity - it must know what to do, and more importantly what not to do. The risk of repeating historical missteps associated with indiscriminate protectionism, indigenisation drives, and poorly designed infant-industry policies must be consciously avoided.

   6. “That logic becomes unavoidable in a world where global manufacturing is anchored in China’s scale and integrated industrial systems, which effectively determine the international cost and technology frontiers that no national tariff wall can override”

Acknowledging China as an anchor is for global manufacturing is reality! Thankfully, we have gone past comparing India and China on varied parameters and timelines.

   7. “The chapter on Education and Health focuses on the roles of the private sector and citizens in managing obesity, noncommunicable diseases, and digital addiction, and on stronger education–skills–industry linkages to build a future-ready workforce”

The emphasis on individual responsibility is particularly important. Health must be recognised as a personal asset, requiring conscious management. Encouragingly, there are decisive signs of behavioural shifts among younger cohorts towards eating healthier, drinking less, and hitting the gym.

Education too needs some rethinking. Social media access for teens needs to be debated (as being done in other countries) for its content as well as distraction value. Or, we may be at the risk of raising a generation of you-tubers and influencers, unfit for a productive economic participation.

Last, but not the least, 

  8.“The paradox of 2025 is that India’s strongest macroeconomic performance in decades has collided with a global system that no longer rewards macroeconomic success with currency stability, capital inflows, or strategic insulation”.

Economists love paradoxes, and for a good reason - they often conceal deeper truths. In India’s case, our strongest macroeconomic performance needs to ultimately withstand statistical scrutiny, particularly as new GDP and CPI series are introduced.  More importantly, it must be reinforced by demonstrably stronger institutional capacities as well capabilities that global investors and strategic partners cannot easily discount.

  * The views expressed are personal.