NEW DELHI — India’s Economic Survey for 2025‑26, released on Sept. 22, projects a 6.8% expansion in gross domestic product for the fiscal year, a fiscal deficit of 5.2% of GDP and a marked shift toward artificial‑intelligence (AI)‑driven industries. The 250‑page document, compiled by the Ministry of Finance, offers a data‑rich roadmap for policy makers as the country navigates post‑pandemic recovery, global supply‑chain realignments and a rapid digital transformation.
Key macro‑economic indicators
The Survey lifts the growth outlook for FY 2025‑26 to 6.8%, up from the 6.5% forecast in the previous edition. Real per‑capita income is expected to cross the US$2,300 mark, narrowing the gap with upper‑middle‑income economies. Core inflation is projected at 4.5% for the year, with food price volatility remaining the chief risk factor.
On the fiscal front, the government aims to contain the deficit at 5.2% of GDP, down from 5.6% in FY 2024‑25. Primary revenue receipts are slated to rise 9.1% year‑on‑year, driven by higher indirect tax collections and a broadened GST base. Capital expenditure is earmarked at ₹13.5 trillion, reflecting a 12% increase over the previous year and a renewed emphasis on infrastructure, renewable energy and digital connectivity.
Investment and private‑sector confidence
Foreign direct investment (FDI) inflows reached a record ₹12.3 trillion in FY 2025, according to the Survey, with the manufacturing and services sectors accounting for 58% of total FDI. The report credits the Production‑Linked Incentive (PLI) schemes and the Make‑in‑India initiative for attracting high‑value projects in electronics, pharmaceuticals and green technologies.
Domestic private investment is set to climb 8.4% in FY 2025‑26, buoyed by a surge in corporate bond issuances and a revival of the small‑and‑medium enterprise (SME) financing pipeline. The Survey notes that the credit‑to‑GDP ratio rose to 22.7% in March 2025, the highest level in a decade, indicating robust lending activity.
AI and the digital economy
For the first time, the Survey dedicates a full chapter to AI diffusion, citing the Microsoft Global AI Diffusion Report as a benchmark. AI‑related investment is projected to reach ₹2.1 trillion by FY 2026‑27, a 34% jump from the previous year. The report highlights three priority areas: AI‑enabled agriculture, health‑tech diagnostics and intelligent manufacturing.
Policy recommendations include a ₹150 billion AI research fund, tax incentives for AI‑driven start‑ups and a national AI talent pipeline that will train 1.2 million workers by 2030. The Survey warns that without a coordinated data‑governance framework, the benefits of AI could be unevenly distributed.
Labour market and social indicators
Employment generation remains a central focus. The Survey estimates that 9.5 million jobs will be created in FY 2025‑26, with the services sector accounting for 55% of new positions. Unemployment is projected to fall to 5.8%, down from 6.2% in FY 2024‑25, as the government’s skill‑development programmes gain traction.
On the social front, the Survey records a 2.3% rise in the Human Development Index (HDI) score, driven by improvements in education enrolment and health outcomes. Rural electrification reached 98.7% of households, while access to clean drinking water rose to 93.4%.
Risks and policy outlook
The Survey flags three macro‑economic risks: external debt servicing pressures, climate‑related agricultural shocks and the potential slowdown in global demand for Indian exports. To mitigate these, the Finance Ministry proposes a phased reduction in the corporate tax rate to 22% for firms with turnover below ₹5,000 crore, and a targeted fiscal stimulus of ₹1.2 trillion for climate‑resilient infrastructure.
Overall, the Economic Survey 2025‑26 paints a cautiously optimistic picture of India’s economy, underscoring the twin engines of digital innovation and infrastructure investment. The findings will shape the Union Budget slated for presentation on Feb. 1, 2027, and set the tone for policy debates in Parliament over the next twelve months.
