The Indian economy is projected to grow by 6-8-7.2% in 2026-27, according to the government’s latest Economic Survey, which also upgraded the country’s potential growth rate to 7% from 6.5% three years ago.
Terming 2025-26 as an “unusually challenging year” for the economy on the external front due to the elevated global trade uncertainty and the high tariffs which affected business confidence, the Economic Survey for 2025-26 said the government had used the crisis as an opportunity to push through key measures such as the rationalisation of the Goods and Services Tax (GST) and faster progress on deregulation, among others.
“FY27 is therefore expected to be a year of adjustment, as firms and households adapt to these changes, with domestic demand and investment gaining strength,” the Survey, tabled in Parliament on Thursday and authored by Chief Economic Adviser V Anantha Nageswaran and officials from the finance ministry, said.
“Importantly, the cumulative impact of policy reforms over recent years appears to have lifted the economy’s medium-term growth potential closer to 7 per cent. With domestic drivers playing a dominant role and macroeconomic stability well anchored, the balance of risks around growth remains broadly even. Taking these considerations together, the Economic Survey projects real GDP growth in FY27 in the range of 6.8 to 7.2 per cent. The outlook, therefore, is one of steady growth amid global uncertainty, requiring caution, but not pessimism,” it added.
According to the statistics ministry’s First Advance Estimate of GDP for the current fiscal, growth is seen at 7.4%.
The Survey’s GDP growth forecast of 6.8-7.2% for 2026-27 is significantly higher than projections made by global agencies. Earlier this month, the International Monetary Fund (IMF) said it expected India’s GDP growth to fall to 6.4% next year. Prior to the IMF, the World Bank had projected a growth rate of 6.5% for 2026-27.
The Survey’s GDP growth forecast for 2026-27 may need to be soon revised as the Ministry of Statistics and Programme Implementation (MoSPI) is in the process of revising and updating the national accounts data.
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On February 27, MoSPI will release GDP data for October-December 2025 as well as the second advance estimate for 2025-26 as per the new series, which will have a new base year of 2022-23 compared to 2011-12 for the present one and will also incorporate several methodological changes, including new sources of data. Updating the base year and improving data coverage and methodologies are crucial to presenting the correct picture of the economy which changed over the years.
MoSPI will also publish GDP data as per the new series for the last three years. As per the current series with 2011-12 as the base year, GDP growth stands at 7.6% in 2022-23, 9.2% in 2023-24, and 6.5% in 2024-25.
‘Victim of geopolitics’
Writing in the preface to the Survey, Nageswaran said the paradox of 2025 has been 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”.
Citing the rupee – which weakened sharply in 2025 – as an example, Nageswaran said that since India runs a merchandise trade deficit that is not fully cancelled out by the services trade surplus and inward remittances, the country depends on foreign capital flows to maintain a healthy balance of payments. “When they run drier, rupee stability becomes a casualty”.
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But with growth “good”, the outlook favourable, inflation in check, and factors such as rainfall and health of the banking sector supportive, the rupee’s valuation “does not accurately reflect India’s stellar economic fundamentals”. As such, Nageswaran said the rupee is “punching below its weight”.
“Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now. However, it does cause investors to pause. Investor reluctance to commit to India warrants examination,” the government’s top economist noted.
‘Entrepreneurial state’
Calling on the state to become “entrepreneurial”, Nageswaran said that a deeper shift was needed “towards entrepreneurial policymaking under uncertainty”. This implies a state that can act before certainty emerges, structures risk rather than avoids it, learns systematically from experimentation, and corrects course without paralysis.
“India has already begun to see elements of this approach in practice: from the creation of mission-mode platforms in semiconductors and green hydrogen, to the restructuring of public procurement to enable first-of-a-kind domestic innovation, and to state-level deregulation compacts that replace inspection-based control with trust-based compliance. These are early signals of what an entrepreneurial state looks like when it moves from compliance to capability,” the Chief Economic Advisor said.
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