HIGHLIGHTS: Economic Survey 2025-26

Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman tabled the Economic Survey 2025-26 in Parliament today. The highlights of the Economic Survey are as follows.

STATE OF THE ECONOMY

1. The global environment remains fragile, with growth holding up better than expected but risks elevated amid intensifying geopolitical tensions, trade fragmentation and financial vulnerabilities. The impact of these shocks may still surface with a lag.
2. Against this backdrop, India’s performance stands out. The First Advance Estimates place FY26 real GDP growth at 7.4 per cent and GVA growth at 7.3 per cent, reaffirming India’s status as the fastest-growing major economy for the fourth consecutive year.
3. Private Final Consumption Expenditure grew by 7.0 per cent in FY26, reaching 61.5 per cent of GDP, the highest since 2012 (FY23 also recorded 61.5 per cent share). This growth is supported by low inflation, stable employment, and increasing real purchasing power. Strong agricultural performance has bolstered rural consumption, while improvements in urban consumption, aided by tax rationalisation, indicate broad-based demand momentum.
4. Investment activity strengthened in FY26, with Gross Fixed Capital Formation growing by 7.8 per cent and its share remaining steady at 30 per cent of GDP. This momentum was buoyed by sustained public capital expenditure and a revival in private investment activity, as evident from corporate announcements.
5. On the supply side, services remain the main driver of growth. In the first half of FY26, the Gross Value Added (GVA) for services increased by 9.3 per cent, with an estimated 9.1 per cent growth for the entire fiscal year. This trend indicates a broad-based expansion across the sector.

FISCAL DEVELOPMENTS: ANCHORING STABILITY THROUGH CREDIBLE CONSOLIDATION

1. The government’s prudent fiscal management has strengthened credibility and reinforced confidence in India’s macroeconomic and fiscal framework. This led to three sovereign credit rating upgrades in 2025 – by Morningstar DBRS, S&P Global Ratings, and Rating and Investment Information (R&I), Inc.
2. Centre’s revenue receipts strengthened from an average of about 8.5 per cent of GDP in FY16–FY20 to 9.2% of GDP in FY25 (PA). This improvement was driven by buoyant non-corporate tax collections, which rose from about 2.4 per cent of GDP pre-pandemic to around 3.3 per cent post-pandemic.
3. The direct tax base expanded steadily, with income tax returns filed increasing from 6.9 crore in FY22 to 9.2 crore in FY25. Higher return filings reflect improved compliance, greater use of technology in tax administration, and a growing number of individuals entering the tax net as their incomes rise.
4. Gross GST collections during April–December 2025 stood at ₹17.4 lakh crore, registering a year-on-year growth of 6.7 per cent. GST revenue growth is broadly aligned with prevailing nominal GDP growth conditions. In parallel, high-frequency indicators suggest robust transaction volumes, with cumulative e-way bill volumes during April-December 2025 growing by 21 per cent YoY.