Economy on stable footing, GDP growth likely to be 6.8% to 7.2% in FY27

The Economic Survey on Thursday projected the GDP growth in the range of 6.8-7.2 per cent for the next fiscal year on the back of the cumulative impact of reforms, and said the economy remains on a stable footing.The projection is a tad lower than the estimates of 7.4 per cent in the current fiscal.

Amid the domestic currency depreciating steeply in recent months, the Economic Survey 2025-26 said the rupee’s valuation does not accurately reflect India’s stellar economic fundamentals and that the rupee is punching below its weight.“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, it does cause investors to pause. Investor reluctance to commit to India warrants examination,” it said.

The document, prepared by a team of economists led by Chief Economic Advisor V Anantha Nageswaran, however, added that a strong and stable currency is a natural corollary for achieving the goal of the Viksit Bharat and global influence.Rupee is a casualty of foreign capital flows drying up, it added. The document tabled in Parliament by Finance Minister Nirmala Sitharaman emphasised that India is relatively better off than most other countries due to its strong macro fundamentals.

The cumulative impact of policy reforms over recent years appears to be lifting India’s medium-term growth potential to near 7 per cent, it said, and made a strong case for a deeper system-level institutional capacity that factors in geopolitical implications of India’s rise.India needs to prioritise domestic growth in an uncertain global environment, as well as greater emphasis on buffers and liquidity, it added.

The global environment is being reshaped by geopolitical realignments that will influence investment, supply chains and growth prospects, it added.On the price situation, it said a subdued trajectory of core inflation indicates strengthening of supply-side conditions across the economy. The pre-Budget document further said that based on the broad trends observed during the year, the central Government remains well on track to achieve its envisaged fiscal consolidation path, aiming to attain a fiscal deficit target of 4.4 per cent of GDP in 2025-26.

As of November 2025, the Union Government’s fiscal deficit stood at 62.3 per cent of the Budget Estimates.“Markets have acknowledged and rewarded the Government’s commitment to fiscal discipline through lower sovereign bond yields, with the spread over US bonds declining by more than half,” it said.It noted that despite heightened tariffs imposed by the United States, merchandise exports grew by 2.4 per cent (April-December 2025), while services exports increased by 6.5 per cent. Merchandise imports during April-December 2025 increased by 5.9 per cent.