Economic Survey pegs India’s FY27 growth at 6.8-7.2%, outlook remains positive

India’s economy is projected to grow between 6.8% and 7.2% in FY27, with the country’s potential growth estimated at around 7%, the Finance Minister said on Thursday, January 29, while tabling the Economic Survey 2026 in Parliament.

The Survey struck a cautiously optimistic note, stating that India’s growth is holding up better than expected even as the global environment remains fragile and downside risks have intensified due to trade fragmentation, geopolitical tensions and rising financial vulnerabilities.

The Survey flagged pressures from global trade actions, noting that the economy faced stress in 2025 from high reciprocal tariffs of 25% and additional penal tariffs imposed by the US. These measures, it said, added to external headwinds at a time when trade fragmentation and geopolitical tensions were already intensifying.

While domestic fundamentals remain resilient, the Survey warned that the impact of global shocks could surface with a lag, underscoring the need for continued vigilance amid uncertain external conditions.

According to the Survey, domestic demand continues to anchor growth, with rural consumption supported by strong agricultural performance. Urban consumption has also shown improvement, aided by tax rationalisation measures, which have increased disposable incomes.

The economy is currently witnessing broad-based demand momentum, the Survey said, pointing to low inflation, stable employment and rising purchasing power as key factors supporting consumption.

Despite heightened global volatility, India’s external stability was highlighted as a significant strength, with the Survey noting that adequate buffers and a manageable external position have helped contain spillovers from global shocks.

On currency dynamics, the Survey observed that the Indian rupee underperformed in 2025 and is currently “punching below its weight”, with its valuation not fully reflecting India’s strong macroeconomic fundamentals. It said the divergence underscores the influence of global financial conditions despite India’s relative economic resilience.

Looking ahead, the Survey outlined three global risk scenarios for 2026, with the base case being a “managed disorder” scenario, assigned a 45% probability. It also flagged tail risks, including a “systemic shock cascade” scenario with a 10–20% probability, triggered by sharp financial disruptions or geopolitical escalations.

Looking ahead, the Economic Survey said India’s medium-term growth trajectory remains strong, underpinned by ongoing reforms and sustained macroeconomic stability, adding that the country’s overall economic outlook continues to remain positive.

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