The Economic Survey 2025-26 Thursday said that even as the global economic environment remains uncertain due to geopolitical tensions and trade disruptions, domestic growth drivers are expected to continue supporting economic activity.

The survey projected GDP growth in the range of 6.8% to 7.2% for 2026-27 on the back of reforms and strong macro-economic fundamentals.  

"Domestic economy remains on a stable footing. Inflation has moderated to historically low levels, although some firming is expected to occur going forward. Balance sheets across households, firms and banks are healthier, and public investment continues to support activity. Consumption demand remains resilient, and private investment intentions are improving," the Economic Survey said.

Global economic environment remains uncertain

“The global economic environment remains uncertain, shaped by geopolitical tensions, trade disruptions, and divergent growth and inflation outcomes across major economies,” the survey said.  

“While global activity has shown resilience in the near term, underlying vulnerabilities persist, including elevated fiscal pressures, fragmented supply chains, and an increased reliance on economic policy instruments for strategic purposes,” it added.

Strong momentum in the Indian economy

The survey pointed out that against this backdrop, the Indian economy has maintained strong growth momentum in FY26.

“The First Advance Estimates place real GDP growth at 7.4%, with growth largely driven by domestic demand. Private consumption and capital formation continue to support expansion, while services remain the key contributor on the supply side. Manufacturing activity has strengthened, and agriculture has provided stability, notwithstanding structural constraints,” it added.  

Inflation has moderated in the domestic economy

“Inflation has moderated, financial sector balance sheets remain healthy, and fiscal policy continues to strike a balance between supporting growth and consolidation. The external sector remains manageable, supported by services exports and adequate foreign exchange reserves,” it added.

Domestic growth drivers to support economic activity

“Looking ahead, while global uncertainties remain elevated, domestic growth drivers are expected to continue supporting economic activity. With macroeconomic stability in place and ongoing reform efforts, the economy appears well-positioned to sustain growth in the near term,” said the survey.

“The outlook for FY27 is shaped by these domestic strengths, alongside evolving external conditions,” it added.