India growth strong, inflation at historic lows: Economic Survey
New Delhi, Jan 30: India is entering the next fiscal year with strong macroeconomic fundamentals, resilient growth and historically low inflation, according to the Economic Survey of India 2025-26 tabled in Parliament on Thursday.
According to the survey, the economy is consolidating gains while laying the foundation for sustained and inclusive expansion.
“India enters FY26 with strong economic momentum supported by stable macroeconomic fundamentals, sustained policy support, and broad-based sectoral performance,” the survey said.
This is despite the challenging global environment.
The survey projects real GDP growth for FY27 in the range of 6.8-7.2 percent, with real GDP expected to grow by 7.4 percent and Gross Value Added (GVA) by 7.3 percent in FY26.
It said that “the emerging macroeconomic environment reflects an economy that is consolidating its gains while strengthening the foundations for sustained and inclusive growth.”
Regarding prices, the survey said that India experienced the lowest inflation since the start of the CPI series, with headline inflation averaging 1.7 per cent between April and December 2025.
The survey said that this was driven by a general disinflationary trend in food and fuel prices, placing India among emerging markets with the sharpest decline in inflation.
Agriculture continues to play a stabilising role, with the sector estimated to grow by 3.1 percent in FY26, supported by a favourable monsoon.
Manufacturing has emerged as a key driver of economic activity, with GVA growth accelerating sharply in the first half of FY26, while services remain the dominant engine of growth.
“The services sector is estimated to have grown by 9.1 percent in FY26 with its share in GDP reaching new highs,” the survey said.
India’s labour market has shown steady improvement, with total employment reaching 56.2 crore persons in the second quarter of FY26 and the unemployment rate declining to 4.8 percent in December 2025.
Female labour force participation has also risen, reflecting improved inclusion, the survey said.
On trade, the survey’s findings reveal that India’s total exports reached record levels, with services exports playing a central role.
Foreign exchange reserves stood at over USD 701 billion in January 2026, providing a strong buffer against external shocks.
The survey also highlights strengthening fiscal credibility, noting improved revenue receipts, rising capital expenditure and multiple sovereign rating upgrades in 2025.
“Prudent fiscal management by the government has enhanced credibility and strengthened confidence in India’s macroeconomic and fiscal framework,” it said.
On monetary policy, the Reserve Bank of India (RBI) reduced the repo rate by 100 basis points between April and December 2025 to 5.25 percent, creating supportive financial conditions.
The banking sector remains robust, with declining non-performing assets, strong capital adequacy and rising credit growth, particularly for MSMEs.
Summing up the outlook, the survey said that “the macroeconomic trends in FY26 point to an economy characterised by stability alongside momentum,” supported by broad-based growth, moderating inflation, strong external buffers and sustained public investment.
