Economic Survey Sees Stable Economy, Growth Potential Near 7%

The Economic Survey said the Indian economy is on a stable footing, with medium-term growth potential rising to nearly 7% from about 6.5% three years ago, reflecting the cumulative impact of policy reforms undertaken in recent years. 

The survey projected real GDP growth at 6.8-7.2% in 2026-27, lower than an estimated 7.4% in 2025-26. It said the growth outlook remains steady despite heightened global uncertainty, warranting caution but not pessimism.

The coming year is expected to involve adjustment as firms and households adapt to reforms such as GST rationalisation, faster deregulation and simplified compliance requirements across sectors. Domestic demand and investment are expected to gain strength, supporting growth momentum.

The external environment, however, remains challenging, with downside risks dominating the medium-term outlook. The survey warned that if the global artificial intelligence boom fails to deliver anticipated productivity gains, it could trigger a correction in stretched asset valuations and lead to broader financial contagion. Prolonged trade conflicts could further weigh on investment and weaken global growth.

For India, these global developments are likely to translate into external uncertainty rather than immediate macroeconomic stress, the survey said.  Ongoing trade negotiations with the United States are expected to conclude this year, which could help reduce external uncertainty. Nonetheless, the risks underscore the importance of maintaining adequate policy buffers and credibility.

Domestic inflation has moderated to historically low levels, although some firming is expected going forward. Balance sheets across households, firms and banks are healthier, while public investment continues to support economic activity. Consumption demand remains resilient and private investment intentions are improving, providing resilience against external shocks.

The survey also flagged that the forthcoming rebasing of the consumer price index will have implications for inflation assessment and will require careful interpretation of price trends.

Economic policy must focus on supply stability, building resource buffers and diversifying trade routes and payment systems, it said. The year 2026 could mark a shift in which policy credibility, predictability and administrative discipline emerge as strategic assets, requiring a stance of strategic sobriety rather than defensive pessimism.