New Delhi: India’s economy is likely to grow at 6.3-6.8 per cent in 2025-26 on the back of strong macroeconomic fundamentals, though strategic and prudent policy management will be required to navigate global headwinds, said the Economic Survey on Friday.
The GDP growth rate is estimated to slip to 4-year low of 6.4 per cent in the current financial year ending March 2025, close to its decadal average.
The key pre-Budget document also emphasised that the country needs to grow at 8 per cent for up to two decades to become a developed nation or Viksit Bharat by 2047.
Also, to achieve this growth, the investment rate must rise to 35 per cent of GDP, up from the current 31 per cent, and develop the manufacturing sector further and invest in emerging technologies such as AI, robotics, and biotechnology.
“The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent,” said the survey authored by a team lead by Chief Economic Advisor V Anantha Nageswaran.
Navigating global headwinds will require strategic and prudent policy management and reinforcing the domestic fundamentals, it added.
The survey noted that a steady growth trajectory shapes the global economic outlook for 2024, though regional patterns vary.
The near-term global growth is expected to be a shade lower than the trend level. The services sector continues to drive global expansion, with notable resilience in India.
Meanwhile, manufacturing is struggling in Europe, where structural weaknesses persist. Trade outlook also remains clouded in the next year, the survey added.
It further said inflationary pressures have been easing globally, though risks of synchronised price pressures linger due to potential geopolitical disruptions, such as tensions in the Middle East and the ongoing Russia-Ukraine conflict.
“In brief, there are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides too,” it said.
To realise the aspirations of Viksit Bharat by 2047, the survey stressed that it is important that the medium-term growth outlook of India be assessed in the context of emerging global realities of Geo-Economic Fragmentation (GEF), Chinese manufacturing prowess, and global dependency on China for energy transition efforts.
It also puts forth a way forward to reinvigorate the internal engines and domestic levers of growth by focusing on one central element of systemic deregulation, which will enable a paradigm of economic freedom to businesses of individuals and organisations to pursue legitimate economic activity with ease.
In the preface of the 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.
“That means vowing and acting to stop micromanaging economic activity and embracing risk-based regulations,” he said.
He said ‘Getting out of the way’ and allowing businesses to focus on their core mission is a significant contribution that governments around the country can make to foster innovation and enhance competitiveness.
Effective government policies also mean changing the operating principle of regulations from ‘guilty until proven innocent’ to ‘innocent until proven guilty’, he added.
