The Economic Survey presented in Parliament on Thursday projects India’s GDP growth at 6.8% to 7.2% in FY27 (2026–27), indicating a slowdown compared to the 7.4% growth estimate for the current fiscal year. The Survey, tabled by Finance Minister Nirmala Sitharaman, also states that India’s potential growth rate has increased to 7%, up from 6.5% three years ago.

According to the Economic Survey, 2025–26 has been described as an “unusually challenging year” for the Indian economy due to global factors such as elevated trade uncertainty and high tariffs that affected business confidence. Despite these difficulties, the government used the situation to push forward major reforms, including the rationalisation of the Goods and Services Tax (GST) and faster progress on deregulation.

The Survey explains that FY27 is expected to be a phase where the economy adjusts to these reforms. It states, “FY27 is therefore expected to be a year of adjustment, as firms and households adapt to these changes, with domestic demand and investment gaining strength.”

The Survey further highlights that recent policy reforms have strengthened India’s medium-term growth outlook. It notes, “Importantly, the cumulative impact of policy reforms over recent years appears to have lifted the economy’s medium-term growth potential closer to 7 per cent.” It also adds that domestic factors are expected to play a major role in driving growth and that macroeconomic stability remains strong.

The Survey emphasises that the risks surrounding growth remain balanced and that the outlook is steady despite global uncertainty. It states, “With domestic drivers playing a dominant role and macroeconomic stability well anchored, the balance of risks around growth remains broadly even.” It further says, “Taking these considerations together, the Economic Survey projects real GDP growth in FY27 in the range of 6.8 to 7.2 per cent.”

The Survey concludes that India’s growth outlook is positive but requires caution rather than pessimism. It states, “The outlook, therefore, is one of steady growth amid global uncertainty, requiring caution, but not pessimism.”

The current fiscal year’s growth estimate stands at 7.4%, according to the First Advance Estimate of GDP released by the Ministry of Statistics and Programme Implementation (MoSPI). Compared to this, the FY27 forecast indicates a moderate slowdown but still remains strong.

The Survey’s growth projection is higher than forecasts made by international agencies. Earlier this month, the International Monetary Fund (IMF) projected that India’s GDP growth would fall to 6.4% next year, while the World Bank estimated a growth rate of 6.5% for FY27.

However, the Survey also notes that the FY27 growth projection may need revision due to changes in national accounts data. MoSPI is currently revising and updating GDP data, and on February 27, it will release GDP figures for October–December 2025 along with the second advance estimate for 2025–26 under a new data series.

This new series will use 2022–23 as the base year, replacing the current base year of 2011–12, and will include methodological changes and new data sources. The Survey emphasises that updating the base year and improving data coverage are important to present an accurate picture of the economy as it has evolved over time.

MoSPI will also publish GDP data under the new series for the last three years. Under the current series, GDP growth was 7.6% in 2022–23, 9.2% in 2023–24, and 6.5% in 2024–25.

In the preface to the Economic Survey, Chief Economic Adviser V Anantha Nageswaran described India’s economic situation as being shaped by global geopolitical factors. He said that the paradox of 2025 was that India’s strong macroeconomic performance coincided with a global system that did not reward such success with currency stability or capital inflows.

He wrote that India’s strong economic fundamentals have not translated into stability for the rupee. Referring to the weakening of the rupee in 2025, he explained that India’s dependence on foreign capital flows makes currency stability vulnerable when those flows decline.

He stated, “When they run drier, rupee stability becomes a casualty.” He also noted that despite good growth, favourable outlook, controlled inflation, supportive factors like rainfall and banking sector health, the rupee’s value does not reflect India’s economic strength.

Nageswaran said that the rupee is undervalued compared to India’s fundamentals. He stated that the rupee is “punching below its weight.” He further explained that an undervalued rupee can provide some advantages in the current global environment, especially in offsetting the impact of higher American tariffs on Indian goods.

He said, “Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now.” However, he also pointed out that a weak rupee can make investors cautious.

He added, “However, it does cause investors to pause. Investor reluctance to commit to India warrants examination.”

The Economic Survey also calls for a shift in the role of the state. Nageswaran urged the government to adopt an “entrepreneurial” approach in policymaking. He said that the state should be capable of acting under uncertainty, structuring risks, learning from experimentation, and adjusting policies when needed.

He explained that India has already started moving in this direction. Examples mentioned in the Survey include mission-mode initiatives in semiconductors and green hydrogen, changes in public procurement to encourage domestic innovation, and state-level deregulation measures that replace inspection-based control with trust-based compliance.

Nageswaran said that these developments reflect a shift in governance. He stated that these are “early signals of what an entrepreneurial state looks like when it moves from compliance to capability.”

Overall, the Economic Survey presents a picture of steady but cautious optimism. It highlights the challenges faced by the Indian economy due to global uncertainty, while also underlining the positive impact of domestic reforms and policy measures. It suggests that FY27 will be a period of adjustment, where the economy adapts to recent changes, supported by strengthening domestic demand and investment.

At the same time, the Survey stresses that India’s medium-term growth prospects remain strong, with potential growth moving closer to 7%, even as global agencies project lower growth rates. The Survey concludes that while global uncertainty persists, India’s economic fundamentals remain robust and its growth outlook remains stable.