Economic Survey 2025–26: Indian Economy Resilient Amid Global Turmoil, Warns on Jobs, Education and Trade Gaps

The Union Government on Wednesday tabled the Economic Survey 2025–26 in Parliament, presenting a comprehensive assessment of India’s economic performance over the past year and outlining key challenges ahead of the Union Budget. The document was presented by Nirmala Sitharaman and prepared under the leadership of Chief Economic Advisor V. Anantha Nageswaran.

Often described as the government’s annual “report card,” the Economic Survey serves as a factual mirror of how public resources have been deployed, how the economy has responded to global and domestic pressures, and where corrective action is urgently required. This year’s Survey tells a story of macroeconomic resilience, careful fiscal management, and strategic restraint, while simultaneously issuing strong warnings on human capital quality, trade dependence, and structural inefficiencies.

Growth Outlook: Steady Momentum in an Uncertain World

Despite heightened geopolitical tensions, supply-chain disruptions, and tight global financial conditions, the Economic Survey projects that India will remain among the fastest-growing major economies.

• GDP growth for FY27 is projected in the range of 6.8% to 7.2%

• Agriculture growth for FY26 is estimated at around 3.1%

• Services and manufacturing continue to anchor domestic demand

The Survey underscores that India’s growth engines are increasingly domestically driven, supported by public capital expenditure, infrastructure investment, and consumption recovery. Importantly, the document highlights that the central government has met its fiscal deficit reduction targets ahead of schedule, reinforcing confidence in India’s fiscal discipline.

Inflation, which had emerged as a global concern over the past few years, is expected to moderate gradually, offering relief to households and creating policy space for sustained growth.

Reform Narrative: From Governance to Transformation

Ahead of the Budget Session, Prime Minister Narendra Modi had described the government’s journey as moving from governance to reform-driven transformation. The Survey aligns closely with this vision, repeatedly invoking the framework of “Reform, Perform, Transform.”

According to the Survey, structural reforms initiated over the past decade—ranging from tax rationalisation to digital public infrastructure—have strengthened India’s ability to absorb shocks. However, it also cautions that reform momentum must continue uninterrupted, particularly in areas that directly affect productivity and competitiveness.

Trade and External Sector: A Geopolitical Casualty

One of the Survey’s most pointed arguments is that India’s external sector stress in 2025 was largely geopolitical in origin, not policy-induced. The document describes India as a “victim of geopolitics”, referencing global conflicts, disrupted shipping routes, and aggressive trade policies by major economies.

Despite these headwinds:

• Merchandise exports grew 2.4% during April–December 2025

• Total merchandise trade stood at approximately $1.1 trillion

However, a structural imbalance persists:

• Exports: ~₹38 lakh crore

• Imports: ~₹62 lakh crore

This gap continues to fuel India’s trade deficit.

Changing Export Profile

The Survey notes a positive shift in India’s export basket. The country is no longer dependent solely on raw materials or low-value goods. High-growth segments now include:

• Electronics and engineering goods

• Petroleum products

• Pharmaceuticals and chemicals

• Gems and jewellery

At the same time, the import bill remains dominated by:

• Crude oil

• Gold

• Electronics

• Machinery and fertilisers

When services exports and remittances are factored in, India’s Current Account Deficit (CAD) remains in the 0.7%–1% of GDP range, which the Survey describes as economically manageable.

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Rupee Management: Stability Over Symbolism

The depreciation of the Indian rupee during 2025 raised concerns in financial markets. The Economic Survey addresses this issue directly, clarifying that the rupee’s weakness was driven by external factors, particularly:

• Elevated interest rates in the United States

• Global risk aversion

• Capital outflows by Foreign Institutional Investors (FIIs)

The Survey strongly defends the approach taken by the Reserve Bank of India, which prioritised stability over optics.

Instead of aggressively selling foreign exchange reserves, the RBI relied on dollar swap operations worth $15–20 billion, ensuring dollar liquidity without triggering panic.

India’s foreign exchange reserves stand at around $645 billion, placing the country among the world’s top reserve holders. The Survey emphasises that these reserves are a buffer, not a target, and should be used judiciously to manage volatility rather than defend arbitrary exchange rates.

Strategic Indispensability: Rethinking Industrial Policy

Moving beyond traditional import substitution, the Survey introduces the concept of “Strategic Indispensability.”

The idea is clear:
India should not merely manufacture for itself but integrate so deeply into global supply chains that the world cannot afford to bypass India.

Priority Sectors Identified

• Electronics and semiconductors

• Defence manufacturing

• Energy equipment and green technologies

• Critical minerals

• Pharmaceuticals and medical devices

The Survey argues that strategic self-reliance in these sectors would reduce vulnerability to trade weaponisation and generate high-quality employment.

However, it also acknowledges that policy intent must be matched by execution. Persistent challenges such as high logistics costs, tax complexity, and regulatory overload continue to undermine competitiveness.

Education: Quantity Without Quality

Perhaps the most sobering section of the Survey relates to human capital, particularly education.

While enrolment levels have improved significantly, learning outcomes remain deeply concerning. Data from national assessments reveal that in several states, Class 5 students struggle with basic reading and comprehension.

In higher education:

• Over 4.3 crore students are enrolled in colleges and universities

• A wide gap exists between degrees awarded and skills demanded by employers

The Survey bluntly states that India faces an employability crisis, not an access problem. It calls for:

• Stronger teacher training

• Focus on foundational learning

• Integration of technology in classrooms

• Closer industry-academia collaboration

Healthcare: From Treatment to Prevention

India’s healthcare landscape is undergoing a demographic and epidemiological transition.

• Life expectancy has risen to nearly 70 years

• Disease burden is shifting toward non-communicable diseases such as diabetes, hypertension, and heart ailments

Public health expenditure by the Centre and states stands at around 2.1% of GDP, an improvement but still below global benchmarks.

The Survey acknowledges the impact of Ayushman Bharat, which provides health insurance coverage to nearly 55 crore citizens, but stresses that preventive healthcare must become the policy priority.

Gold Imports: Cultural Preference, Economic Cost

Gold occupies a unique place in the Indian economy. The Survey highlights that gold imports in 2024–25 were valued between $55–60 billion, making it the second-largest import item after crude oil.

High global uncertainty pushed gold prices upward in 2025, yet domestic demand remained resilient, aggravating the trade deficit.

To address this, the Survey advocates the financialisation of gold, encouraging alternatives such as:

• Gold Exchange Traded Funds (ETFs)

• Sovereign Gold Bonds

• Digital gold

While acknowledging cultural attachment to physical gold, the Survey hints that the upcoming Budget may introduce policy measures to moderate imports.

Conclusion: Stability Today, Structural Tests Tomorrow

The Economic Survey 2025–26 presents an economy that is stable, resilient, and strategically cautious. The government claims success in managing fiscal and current account deficits while navigating currency volatility through calibrated interventions.

Yet, the Survey is also a warning. Without decisive reforms in education quality, healthcare delivery, logistics efficiency, and regulatory simplification, India’s long-term growth potential could be constrained.

As the nation awaits the Union Budget on February 1, the Survey sets the agenda clearly:

Macroeconomic stability must now be matched by microeconomic efficiency. The path to becoming a developed economy runs not just through global strategy, but through classrooms, clinics, factories, and supply chains across the country.