ECONOMIC SURVEY- AN ANALYSIS OF COUNTRY’S ECONOMIC PERFORMANCE - Nandini Agarwal

 

The Economic Survey of India is an annual flagship document, presented by Finance Ministry ahead of the Union Budget, that provides a detailed, comprehensive analysis of the country’s economic performance over the preceding financial year. It outines growth trends, sectoral performance (agriculture, industry services), inflation, and the government’s fiscal outlook, esentially acting as a report card and a roadmap for future policy performance.

 

HIGHLIGHT 1- THE STATE OF INDIAN ECONOMY

●       The first advance estimate projects real gdp growth and GVA growth for FY26 to 7.4 and 7.3 per cent respectively.

●       The potential growth for india estimated at around 7 per cent, while real gdp growth for FY27 projected at 6.8–7.2 per cent.

●        India’s medium-term growth potential has strengthened to 7 per cent, positioning the economy on a path of steady expansion amid global uncertainty.

HIGHLIGHT 2: INFLATION DYNAMICS IN THE ECONOMY

●       The demand-led growth in the economy has unfolded alongside a marked easing of inflation, which has improved real purchasing power and supported consumption. Domestic inflation dynamics in FY26 (April-December) reflect a broad-based easing in price pressures, led by a sharp disinflation in food prices.

●        Headline CPI inflation declined to 1.7 per cent, driven primarily by corrections in vegetable and pulse prices, supported by favourable farm conditions, supply-side interventions, and a strong base effect.

●       India has also seen the highest reduction (1.8%) in headline inflation among major economies such as UK, Japan, China, France etc. in 2025.

HIGHLIGHT 3:  INDIA’S BALANCE OF PAYMENTS

●        India’s total exports reached a record USD 825.3 billion in FY25, registering a 6.1 per cent year-on-year growth, driven primarily by robust growth in services exports.

●       India’s current account deficit remained moderate, supported by strong net inflows from services exports and remittances that offset the merchandise trade deficit. In Q2 FY26, India’s CAD, at around 1.3 per cent of GDP, compared favourably with several other major economies.

●        India’s current account structure reflects a merchandise trade deficit offset by strong net inflows of invisibles, led by rising surpluses in services and private transfers. These components have collectively kept the current account deficit (CAD) within manageable levels. In H1 FY26, the CAD moderated to USD 15 billion (0.8 per cent of GDP) from USD 25.3 billion (1.3 per cent of GDP) in H1 FY25

●        However, the widened BOP deficit, coupled with market uncertainty over the outcome of a trade deal with the US, has exerted pressure on the Indian Rupee, causing it to weaken. Between April 1 and January 22, 2026, the Indian rupee depreciated by approximately 6.5 per cent against the US dollar.

HIGHLIGHT 4: LABOUR MARKET DYNAMICS

●       The labour force participation has experienced fluctuations over the months, however, December still witness highest labour force participation with a rate of 56.1.

●    The unemployment rate has decreased as of Q2 by 0.2% declining from 5.4% to 5.2%. Various skill development programs and creation of jobs by the private and government sector are responsible for this.

REFERENCES

●       https://www.indiabudget.gov.in/economicsurvey/

●       https://prsindia.org/files/policy/policy_committee_reports/Economic_Survey_2025-26.pdf

●       https://www.indiabudget.gov.in/economicsurvey/doc/Infographics%20English.pdf

 

NANDINI AGARWAL

ECONOMICS HONORS