Economic Survey 2025-26 pegs 6.8%–7.2% GDP growth, multi-decade low NPAs, strong primary markets; key highlights

The Economic Survey for financial year 2025-26 was tabled in Parliament by Finance Minister Nirmala Sitharaman on Thursday, January 29.

The 687-page document prepared under the leadership of V. Anantha Nageswaran, Chief Economic Advisor to the Government of India, acts as a comprehensive report card on the Indian economy's performance over the past year and helps the government formulate policies in the upcoming Union budget, which will be presented on Sunday, February 1.

This year's survey comprises 16 chapters delving into the details of every sector of the economy.

Here are key takeaways from the Economic Survey 2025-26.

Growth outlook

The Economic Survey has pegged India's economic growth rate in the range of 6.8%-7.2% for the current financial year. The survey noted that the global environment remains fragile, with growth holding up better than expected but risks elevated amid intensifying geopolitical tensions, trade fragmentation and financial vulnerabilities. The impact of these shocks may still surface with a lag.

Against this backdrop, India’s performance stands out. The First Advance Estimates place FY26 real GDP growth at 7.4% and GVA growth at 7.3%, reaffirming India’s status as the fastest-growing major economy for the fourth consecutive year.

Banking sector health

The Economic Survey noted that the health of India's banking system has been improving steadily, as the gross non-performing assets, as a percentage of total advances, for scheduled commercial banks came down to a multi-decade low of 2.2%.

"The stability of the banking system in the country can be attributed to strong capital buffers, low non-performing asset ratios (NPAs), and increasing profitability. The favourable balance sheets of the SCBs bode well for the overall health of the economy," the survey said.

A significant improvement has been observed in the asset quality of SCBs, as evidenced by their gross non-performing asset (GNPA) ratio and net NPA ratio, having reached a multi-decadal low level and record low level, respectively," the survey added.

Economic Survey on GST reforms

The survey said that the recent Goods and Services Tax (GST) rationalisation is expected to support demand by lowering tax incidence and improving price competitiveness. The survey also highlighted the steps that the government should take to streamline the GST network.

"Since the lower rates are expected to stimulate higher consumption volumes and strengthen compliance, volume effects could offset the impact of rate reductions on revenues," said the Economic Survey 2025-26 authored by Nageswaran.

The survey added that the next wave of GST reforms could focus on reimagining the e-Way Bill system as a facilitator of smooth logistics rather than only as a tool for enforcement and control, in line with the changing needs of businesses and supply chains.

Economic Survey on primary markets

On the financial markets, the survey said that India's primary markets in FY26 remained resilient and vibrant, leading the world in initial public offer (IPO) issuances.

“Strong performance was underpinned by sound macroeconomic fundamentals, robust investor participation and the continued fine-tuning of regulatory frameworks by SEBI, despite global headwinds. India’s primary markets continued to attract both domestic and international investors, reinforcing the country’s position as a key driver of global capital formation,” the survey said.

Economic Survey on merchandise exports

The survey highlighted that India’s share of global merchandise exports has nearly doubled, rising from 1% to 1.8%; similarly, its share in global commercial services exports has more than doubled, rising from 2% to 4.3%.

“The country has not only increased its share in global trade but has also diversified its partnerships and the range of products it trades. According to UNCTAD’s Trade and Development Report 2025, India ranks third among countries in the Global South in terms of the diversity index of trade partnerships [17], following China and the UAE,” the document said.

Economic Survey on service exports

India's services exports touched an all-time high of 387.5 billion, registering a robust 13.6% (YoY) growth and reinforcing India’s position as a global hub for technology, business, and professional services.

“While the US remains the largest destination for software exports from India, its share has decreased from 54.1% to 52.9% between FY24 and FY25. Concomitantly, Europe’s share has increased from 30.8% to 32.8% during the same period,” the survey noted.

Economic Survey on Foreign exchange reserves

The survey highlighted that India’s foreign exchange reserves increased to $701.4 billion as of 16 January 2026, up from $668.3 billion as of the end of March 2025.

The increase has come at a time when global interest-rate differentials, capital flows and commodity prices remain volatile. This expansion in reserves has helped steady India’s external position despite shifts in global risk sentiment and episodes of portfolio outflows.

Economic Survey on manufacturing

Manufacturing GVA grew by 7.72% and 9.13% in Q1 and Q2, respectively, primarily driven by ongoing structural shifts within the sector.

“These include a gradual move toward higher-value manufacturing segments, improved availability of industrial infrastructure through corridor-led development, and greater adoption of technology and formalisation across firms. This reflects India’s improved industrial capability,” the survey said.

AI boom

The survey cautioned against broader financial contagion if the AI boom fails to deliver the anticipated productivity gains, which may lead to a correction in overly optimistic asset valuations.

Economic Survey on rupee fall

The survey added that rupee valuation does not accurately reflect India’s stellar economic fundamentals.

The external environment remains uncertain; India needs to be cautious, but there is no reason for pessimism, the survey added.