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| India's Economy Set to Grow 7.4% in FY26, Economic Survey Projects |
The survey, authored by Chief Economic Adviser V. Anantha Nageswaran, projects growth will moderate slightly to between 6.8% and 7.2% in FY27, while emphasizing the need for increased private sector investment to sustain long-term expansion.
Strong Growth Amid Global Uncertainty
The 7.4% growth forecast for the current fiscal year closely matches projections from international institutions, with the International Monetary Fund estimating 7.3% and the World Bank forecasting 7.2%. However, both organizations project a slower pace for FY27, at 6.4% and 6.5% respectively.
The survey highlights how India aims to navigate global economic challenges, including increased US tariffs and uncertainties surrounding artificial intelligence-driven growth. It cites recent regulatory reforms, including GST and income tax relief, as well as a simplified direct tax law scheduled to launch in April, as key drivers of economic momentum.
Call for Private Investment
A central theme of the survey is an urgent appeal for India's private sector to accelerate investment and job creation, particularly as AI and emerging technologies disrupt traditional labor markets. Public capital expenditure has surged from Rs 5.93 trillion in FY22 to Rs 11.21 trillion in FY26, reaching 3.1% of GDP. However, the survey stresses that meeting India's development goals by 2047 will require a significant shift toward private investment.
Manufacturing and Technology Focus
India's manufacturing strategy emphasizes global supply chain diversification, quality improvements, and deeper trade partnerships. The country is also pursuing self-sufficiency in semiconductors and other critical sectors, alongside overhauled foreign direct investment and bankruptcy regulations.
The survey flags potential risks from what the IMF has called an "AI bubble," warning that a market correction could slow capital flows and impact household wealth.
Inflation Under Control
Inflation remains well-contained, with the Reserve Bank of India projecting consumer price inflation at 2% for the year—significantly below its 4% target. This moderation, driven largely by food price corrections, has affected nominal GDP, now estimated at 8%, falling short of the budgeted 10.1%.
A new GDP series with a 2022-23 base year will inform the second advance estimate due February 27, though economists expect minimal impact on growth figures.
The Economic Survey sets the stage for the Union Budget, which is expected to address these priorities while balancing fiscal prudence with growth objectives.
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