India’s GDP growth is projected to range between 6.3% and 6.8% in 2025-26, according to the Economic Survey tabled by Union finance minister Nirmala Sitharaman in Parliament on Friday, that pushed for more reforms, especially by states, to take growth to a higher trajectory.
The GDP growth range provided in the survey is not very different from the 6.4% at which the economy is projected to grow this year (2024-25), which itself is not too far away from the 6.5-7% estimated in last year’s Economic Survey.
Chief economic adviser V Anantha Nageswaran, speaking later at a press conference, characterised the projection as a baseline estimate that could be exceeded. “Whenever opportunistically we can generate higher export growth, as we were able to do so in 2021-22, we should be able to capitalise on that,” he said, noting that export diversification and expansion into new geographies could add 0.5- 1 percentage point to growth rates.
“Agriculture sector itself can add 0.5- 1% of additional GDP growth,” Nageswaran said, outlining how these improvements could push overall growth towards 7.5% or 8%.
But he added that the global economic context isn’t particularly conducive to growth.
The Economic Survey points to challenging global conditions affecting the baseline projection. The Index of Global Real Economic Activity (IGREA) has remained in negative territory since October 2024 (-3.37), declining to -11.44 in November and -45.40 in December 2024, according to Dallas Fed data, it stated.
“If you look at Global Real Economic Activity Index…, it has been declining since 2023, and it has now come to negative territory. So, the growth rate after having achieved 9.7 and 8.2, the current relative slowdown in the economy is to be seen in that context,” Nageswaran said.
He added that the baseline growth projection reflects current global conditions: “This baseline number reflects the current uncertainties and the fact that global real economic activity has slowed down in the last one-and-a-half to two years.”
To meet its target of becoming a developed economy by 2047, India would need a GDP growth rate of 8% a year, the Economic Survey said, pushing for deregulation and measures that make it easier to do business. The Economic Survey listed land, labour and industrial laws as areas where it was possible to make life easier for businesses. Nageswaran himself said that in the absence of such reforms or measures policy initaitives may not result in the desired outcomes.
In the preface of the Economic Survey, Nageswaran said the most effective policies governments — Union and states — in the country can embrace is to give entrepreneurs and households back their time and mental bandwidth. “That means rolling back regulation significantly”.
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Interestingly, the document was silent on the issue of reviving consumption demand, which has been central to many policy discussions in recent months. It only cautioned private firms against being “stingy” in offering salaries to employees, noting that reduced wages impact consumption and ultimately affect businesses negatively.
On foreign investments, the survey notes that while net FDI remains positive, there are patterns of outflows exceeding inflows in terms of profit repatriation and Indian investments abroad.
The survey, comprising 13 chapters, focuses on global threats to India’s trade and industries while highlighting the potential of Indian agriculture. It concludes with a dedicated analysis of artificial intelligence’s impact on employment and making India “future ready.” The chapter examines artificial intelligence’s potential impact on employment, particularly in the services sector, looking at institutional preparations needed for potential labour market changes, especially in IT where automation could affect various roles.
The survey identified critical dependencies in manufacturing, particularly with China, which it projects will control about 50% of global manufacturing. Three sectors are highlighted as especially dependent: active pharmaceutical ingredients (API), components for solar power equipment including the EV ecosystem, and microchips.
“Changing global landscape is increasingly challenging the external economy, and hence, we need to tread carefully,” a senior official said, speaking on condition of anonymity.
Congress leader and former finance minister P Chidambaram on Friday said Nageswaran’s preface was a “powerful indictment” of the Narendra Modi government and its policies. “After the introductory 10 paras that refer to the difficulties faced by U.S. and Europe, the next 10 paras describe the state of the Indian economy. They are a powerful indictment of the government led by Mr Narendra Modi and the policies pursued so far,” he said.
Finance minister Nirmala Sitharaman will present the budget for 2025-26 on Saturday.