Highlights

  • Economic growth forecasted between 6.3%-6.8%
  • Formal employment sector shows significant growth
  • Foreign exchange reserves remain robust

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India’s economic growth projected at 6.3%-6.8% in FY26: Economic Survey 2024-25

The Economic Survey 2024-25 projects India’s economic growth between 6.3% and 6.8% in FY26, supported by strong economic fundamentals, rising formal employment, and a stable external account.

India’s economic growth projected at 6.3%-6.8% in FY26: Economic Survey 2024-25

India's economy is projected to grow between 6.3% and 6.8% in FY26, as per the Economic Survey 2024-25, which was tabled in Parliament by Finance Minister Nirmala Sitharaman on Friday.

The survey emphasizes that India's economic fundamentals are strong, backed by a stable external account, fiscal consolidation, and steady private consumption.

The government aims to boost long-term industrial growth by focusing on areas like research and development (R&D), micro, small, and medium enterprises (MSMEs), and capital goods. These initiatives are designed to enhance productivity, innovation, and global competitiveness.

According to the survey, "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 percent."

The survey also forecasts that food inflation will ease in the fourth quarter of FY25, thanks to the seasonal drop in vegetable prices and the arrival of the Kharif harvest. A good Rabi production is expected to help control food prices in the first half of FY26.

However, risks to inflation persist, such as adverse weather conditions and rising international agricultural prices. On a positive note, global energy and commodity prices have softened, providing stability to the core inflation outlook. Still, the global political and economic uncertainty remains a challenge.

India's foreign exchange reserves remain strong, covering 90% of external debt and offering an import cover for over ten months.

The reserves increased from USD 616.7 billion in January 2024 to USD 704.9 billion in September 2024, before moderating to USD 634.6 billion as of January 3, 2025. The stability in capital flows has played a crucial role in supporting India's external position.

The survey also highlights substantial growth in formal employment, with net Employees' Provident Fund Organisation (EPFO) subscriptions more than doubling from 61 lakh in FY19 to 131 lakh in FY24.

It stated, "The formal sector in India has seen significant growth, with net Employees' Provident Fund Organisation (EPFO) subscriptions more than doubling from 61 lakh in FY19 to 131 lakh in FY24."

Overall, the Economic Survey paints a positive picture for India's economic prospects in FY26, driven by strong macroeconomic fundamentals, rising formal employment, and robust external reserves.

However, the economy faces challenges from global uncertainties, adverse weather conditions, and international price fluctuations.

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