The global economy had an uneven growth across regions last year, with slowdown in global manufacturing, especially in Europe and parts of Asia, being a visible trend. This was attributed to the supply chain disruptions and weak external demand. However, the services sector performed better, supporting growth in many economies, with India showing resilience.
The Economic Survey, tabled in the parliament on Friday, said growth in the financial year 2026 would be between 6.3 and 6.8 per cent. “Navigating global headwinds will require strategic and prudent policy management and reinforcing the domestic fundamentals...The fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption.”
The survey argued that the inflationary pressures eased in most economies, but the services inflation has remained persistent. “Although commodity prices have stabilised, the risk of synchronised price increases persists. With growth varying across economies and last-mile disinflation proving sticky, central banks may chart varying paths of monetary easing. This will lead to uncertainty over future policy rates and inflation trajectories,” Survey said articulating its views on the economic outlook.
The survey points out that the geopolitical tensions, ongoing conflicts, and trade policy risks continue to pose significant challenges to global economic stability. The headwinds to growth include trade uncertainties and possible commodity price shocks.
The survey hoped that domestically as the order books of private capital goods sector translate into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting growth. Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation and a stable macro-economic environment provide an upside to near-term growth.
The prescription for the country to improve its global competitiveness, grassroots-level structural reforms and deregulation have to be carried to reinforce its medium-term growth potential, the survey argued.
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According to the survey, India displayed steady economic growth. “As per the first advance estimates of national accounts, India’s real GDP is estimated to grow by 6.4 per cent in FY2025. Growth in the first half of FY2025 was supported by agriculture and services, with rural demand improving on the back of record Kharif production and favourable agricultural conditions.”
“Private consumption remained stable, reflecting steady domestic demand. Fiscal discipline and strong external balance supported by a services trade surplus and healthy remittance growth contributed to macroeconomic stability.” Together, these factors provided a solid foundation for sustained growth amid external uncertainties. Looking ahead, India’s economic prospects for FY2026 are balanced, the survey added.
The survey hoped that the food inflation is likely to soften in the fourth quarter of FY25 with the seasonal easing of vegetable prices and Kharif harvest arrivals. “Good Rabi production is likely to contain food prices in the first half of FY2026. Adverse weather events and rise in international agricultural commodity prices, however, pose risks to food inflation.”
