India Budget Economic Survey 2025–26 – Key Highlights & Analysis
The Economic Survey 2025–26, tabled ahead of the Union Budget, provides a comprehensive review of India’s macroeconomic performance, sectoral trends, fiscal health, and reform priorities. It serves as the government’s official diagnostic report on the Indian economy, offering critical insights for policymakers, investors, and UPSC aspirants.
Despite global headwinds such as geopolitical uncertainty, trade fragmentation, and financial volatility, the Survey projects India to remain the world’s fastest-growing major economy, backed by strong domestic demand, fiscal discipline, and structural reforms.
India Budget Economic Survey 2025–26 Highlights PDF
Economic Survey 2025–26 PDF
Executive Summary – Big Picture
The Survey highlights India’s economic resilience, macroeconomic stability, and reform-driven growth, aligned with the long-term vision of Viksit Bharat @2047.
Core themes include:
- Sustaining high GDP growth
- Managing low inflation
- Strengthening fiscal consolidation
- Boosting private investment
- Building strategic resilience in global value chains
- Leveraging technology, MSMEs, and AI responsibly
GDP Growth Outlook – India Leads Global Growth
India’s economy is projected to grow at a robust 7.4% in FY26, retaining its status as the fastest-growing major economy globally.
Key Growth Insights:
- Potential GDP growth raised to ~7%, reflecting reform momentum
- Growth driven primarily by private consumption and public capital expenditure
- Domestic demand remains the main growth engine, reducing dependence on external markets
Inflation – At Historic Lows
The Survey notes that headline CPI inflation averaged ~1.7% during April–December 2025, marking the lowest inflation in the CPI series.
Reasons for Low Inflation:
- Decline in food prices
- Improved agricultural output
- Effective monetary policy by RBI
- Supply-side interventions
This strengthens household purchasing power and supports macroeconomic stability.
Fiscal Consolidation – Deficit Under Control
India has achieved strong fiscal consolidation, reducing the fiscal deficit significantly since the pandemic years.
Fiscal Numbers:
- FY25 Fiscal Deficit: 4.8% of GDP (below target)
- FY26 Fiscal Deficit Target: 4.4% of GDP
- Deficit reduced from 9.2% in FY21 to below 5%
Key Observations:
- Higher tax buoyancy
- Rising revenue receipts
- Increased capital expenditure (CapEx) — nearly 4% of GDP
- Warning about state-level fiscal stress due to populist spending
Banking & Financial Sector – Stronger Than Before
India’s banking system shows multi-decade-low NPAs, improved profitability, and healthier balance sheets.
Highlights:
- Gross NPAs at ~2.2% (September 2025)
- Strong credit growth
- Improved capital adequacy
- Enhanced financial inclusion through digital public infrastructure
The Survey highlights a lower cost of capital as a policy goal, though current borrowing costs remain influenced by India’s current account deficit.
External Sector – Trade, Exports & Global Position
Despite global trade disruptions and tariffs:
Trade Performance:
- Merchandise exports: +2.4% (Apr–Dec 2025)
- Services exports: +6.5% (Apr–Dec 2025)
- Current Account Deficit (CAD): ~0.8% of GDP in H1 FY26
India continues to lead greenfield digital investments globally, strengthening its role in the digital economy.
MSME Sector – Backbone of Growth & Jobs
The Survey underscores MSMEs as critical to India’s supply chains and employment .
MSME Contributions:
- 31.1% of India’s GDP
- 35.4% of manufacturing output
- 48.6% of total exports
- 74.7 million enterprises employing 328+ million people
MSMEs are positioned as a key pillar for industrial competitiveness and export resilience.
Agriculture & Rural Economy – Diversification Gains
Key Trends:
- Growth in livestock (6.1%) and fisheries (7.2%)
- Record cereal production contributes to food security
- Declining dependence on MGNREGS, indicating improving rural livelihoods
The Survey links rural income growth with reduced demand for emergency employment schemes.
Industry & Infrastructure – CapEx-Led Momentum
Industrial Performance:
- Manufacturing GVA growth touched ~9% in Q2 FY26
- Strong momentum in construction, logistics, and infrastructure
- Public-private partnership pipeline of 13,400 km highways worth ₹8.3 lakh crore
Infrastructure investment remains a key long-term growth multiplier.
Services Sector – Growth Engine of India
Services account for over 53% of nominal GDP, led by:
- IT & digital services
- Financial services
- Tourism
- Professional services
Services exports continue to outperform merchandise exports, strengthening India’s global competitiveness .
Technology & AI – Call for Responsible Innovation
The Survey raises serious concerns about AI safety, calling for “non-negotiable” regulatory boundaries .
Risk Areas Highlighted:
- Facial recognition
- Predictive policing
- Emotion detection
- Psychological profiling
- Data misuse
The government emphasizes ethical AI governance to protect citizens’ rights.
Strategic Shift – From Import Substitution to Global Resilience
A major conceptual shift is proposed:
- Move from import substitution to strategic resilience
- Make India an indispensable node in global value chains
- Strengthen manufacturing, exports, and supply chain integration
Key Policy Messages from the Survey
- Encourage private sector investment revival
- Prioritize human capital & skilling
- Deepen capital markets
- Strengthen state fiscal discipline
- Boost innovation and entrepreneurship
- Align reforms with Viksit Bharat @2047 vision
Quiz on Economic Survey
Relevance for UPSC Aspirants
Prelims Focus Areas:
- GDP growth projection
- Inflation rate
- Fiscal deficit targets
- MSME contribution
- AI regulation proposals
- Export & CAD data
Mains Relevance:
- GS Paper III – Indian Economy
- GS Paper IV – Ethics (AI governance)
- Essay – Economic resilience, fiscal discipline, inclusive growth
Sample Mains Question:
“How does the Economic Survey 2025–26 reflect India’s transition toward a resilient and innovation-driven economy?”
Conclusion
The Economic Survey 2025–26 portrays India as a macroeconomically stable, reform-driven, and high-growth economy, navigating global uncertainties with fiscal prudence, domestic demand strength, and technological transformation. However, challenges remain in state finances, job creation, global trade risks, and AI governance.
For UPSC aspirants, the Survey is an essential foundation for Prelims facts, Mains analysis, and interview perspectives.
FAQs – India Budget Economic Survey 2025–26 (UPSC)
1. What is the Economic Survey?
The Economic Survey is an annual report prepared by the Government of India that reviews the country’s economic performance and outlines policy priorities ahead of the Union Budget.
2. Who releases the Economic Survey in India?
It is released by the Ministry of Finance, under the guidance of the Chief Economic Adviser (CEA).
3. What is the GDP growth projection in the Economic Survey 2025–26?
The Survey projects India’s GDP growth at around 7–7.4%, making it one of the fastest-growing major economies.
4. What does the Survey say about inflation in FY26?
It reports historically low CPI inflation, supported by stable food prices, supply-side reforms, and effective monetary policy.
5. What is the fiscal deficit target for FY26?
The fiscal deficit target is around 4.4% of GDP, continuing the path of fiscal consolidation.
6. How does the Survey assess India’s banking sector?
It highlights low NPAs, strong credit growth, improved capital adequacy, and increased financial resilience.
7. What role do MSMEs play according to the Survey?
MSMEs contribute significantly to GDP, manufacturing output, employment, and exports, and are seen as key to inclusive growth.
8. What does the Survey say about Artificial Intelligence (AI)?
It calls for responsible and regulated AI development, emphasizing ethical safeguards, privacy, and risk management.
9. Why is the Economic Survey important for UPSC?
It is crucial for Prelims facts, Mains GS Paper III analysis, Essay topics, and interview discussions on economic policy.
10. Which UPSC subjects benefit from the Economic Survey?
General Studies Paper III (Economy), GS Paper IV (Ethics & Technology), and Essay.
