India's Growth Momentum to Continue into FY27 Despite Global Uncertainties

The Survey projects India's potential growth rate at 7 per cent, revised upward from 6.5 per cent estimated three years ago, reflecting gains from structural reforms, higher public investment, improved logistics and strengthening supply-side conditions.

"The economy retains momentum and growth is likely to be sustained into FY27," the Survey noted, adding that India continues to be better placed than most major economies due to its large domestic market, strong macroeconomic framework and relatively low external vulnerabilities.

The assessment comes at a time when the global economy is facing what the Survey describes as a phase of "fragile and diverging growth", marked by intensifying geopolitical competition, trade policy uncertainty and risks emerging from leveraged investments in technology and artificial intelligence.

According to the Survey, global trade is increasingly shaped by security and political considerations rather than economic efficiency, with countries resorting to tariffs, sanctions and supply-chain realignments. It outlined three possible global scenarios for 2026, ranging from managed disorder to a more severe multipolar breakdown, with a small but significant risk of a systemic global shock.

Against this backdrop, the Survey emphasised that India's macroeconomic fundamentals remain strong. It pointed to healthy banking sector balance sheets, comfortable liquidity conditions, robust credit growth, low external liabilities and adequate foreign exchange reserves as key buffers against external shocks.

On inflation, the Survey said price pressures remain "tamed and anchored", despite periodic volatility in food prices. It highlighted that core inflation has remained subdued, indicating improved supply-side efficiency, better logistics and expanding productive capacity across sectors.

"There is no threat of higher inflation from crude oil imports at present," the Survey noted, adding that stable inflation expectations have helped preserve macroeconomic stability even in an uncertain global environment.

The document also underlined the supportive role of agriculture, with normal monsoon patterns and improved farm prospects helping contain food inflation risks. At the same time, rising infrastructure investment, including expansion of airports, freight corridors and inland waterways, has eased supply bottlenecks and reduced cost pressures.

However, the Survey cautioned that geopolitical developments could affect capital flows and currency stability. It noted that in a world marked by persistent geopolitical turbulence, disruptions to global capital movement could become an enduring feature rather than a short-term risk.

"The rupee's valuation does not accurately reflect India's economic fundamentals," the Survey said, adding that while an undervalued currency provides some export competitiveness, prolonged volatility may cause investors to pause.

To navigate these challenges, the Survey stressed the importance of policy credibility, predictability and administrative discipline, calling them "strategic assets" in the evolving global order.

It emphasised the need for India to simultaneously pursue growth maximisation and shock absorption, described as "running a marathon and a sprint at the same time". This would require building buffers, ensuring supply stability, diversifying trade routes and strengthening domestic manufacturing competitiveness.

The Survey also reiterated the central role of structural reforms, deregulation, and an "entrepreneurial state" capable of timely decision-making under uncertainty.

Despite global headwinds, the overall outlook remains favourable, it said, noting that sustained reforms, strong domestic demand and improving state-level deregulation efforts are raising India's medium-term growth potential.

"In an uncertain and contested world, India's growth story remains intact," the Survey noted, while stressing that resilience, adaptability and long-term policy commitment will be critical to sustaining momentum on the path towards a developed India.

- ANI