By Saumitra Bhaduri
The Economic Survey 2025–26 arrives with reassuring facts at a time of global uncertainty. Growth remains strong and the outlook favourable, with the Survey projecting India’s GDP growth for FY27 in the range of 6.8 to 7.2%, driven by robust domestic demand.
Inflation is contained, supported by comfortable liquidity conditions and timely rainfall that has improved agricultural prospects. External liabilities remain low, banks are healthy, credit growth is respectable, and corporate balance sheets are strong.
The flow of funds to the commercial sector is robust, and the supply of credit is less constrained. Against a fragile global backdrop marked by geopolitical tensions and trade fragmentation, India’s macroeconomic stability stands out.
Resilient Currency Dynamics
The Survey also offers a nuanced view of recent currency weakness, framing it less as a sign of stress and more as a reflection of geopolitical risk and shifting capital flows.
With external liabilities low and adequate foreign exchange buffers, exchange rate movements have remained orderly and largely market-driven, allowing the rupee to act as a shock absorber in a volatile global environment. The Survey further links exchange rate dynamics directly to structural capability.
Manufacturing is not treated merely as a growth driver, but as a stabilising force, one that strengthens the current account, creates a forex buffer, productive employment, and reduces vulnerability to external shocks.
This stability, however, changes the nature of the policy challenge. When macroeconomic risks are contained, the focus must shift from short-term stabilisation to a longer-term strategy.
The Survey implicitly signals that India’s next economic test is not sustaining momentum, but building resilience through improved productive force, with a strong manufacturing sector, improved infrastructure and skilled workforce, quality institutions, and an entrepreneurial mindset that focuses on execution.
Strategic Swadeshi Pillars
It is in this context that the Survey’s treatment of strategic swadeshi merits attention. In a world shaped by export controls, technology denials, and geopolitical fragmentation, greater self-reliance is no longer optional. Strategic swadeshi is increasingly unavoidable as advanced economies weaponise trade, technology, and finance.
Crucially, the Survey presents strategic swadeshi not as a blanket doctrine, but as a calibrated strategy built on three pillars: intelligent import substitution, strategic resilience, and strategic indispensability.
Strategic indispensability, the survey argues, ultimately rests on the proactive role of the State. The Survey also implicitly advances the idea of an entrepreneurial state that does more than regulate or spend, instead actively encourages risk-taking, accepts failures and emphasises process over outcomes.
This role is evident in the state’s use of public capital expenditure, industrial policy instruments, and digital public infrastructure to reduce risk for private investment and crowd in enterprises.
In sum, the Economic Survey 2025–26 confirms that India’s macro fundamentals are strong. Growth is good, risks are contained, and financial conditions are supportive. But the Survey also sets a higher bar.
The next phase of development, coupled with strategic autonomy, will hinge on institutional strength and state capacity. The challenge ahead is not simply to grow faster, but to grow better.
(The author is professor at Madras School of Economics)
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.