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India’s economy is expected to grow 6.8–7.2 per cent in FY27, with potential growth estimated around 7 per cent, Finance Minister Nirmala Sitharaman said on Thursday while tabling the Economic Survey 2025–26 in Parliament. The Survey highlighted that India ended 2025 stronger than expected, supported by resilient domestic demand, structural reforms, and proactive policy measures, while Chief Economic Adviser V. Anantha Nageswaran described the rupee as a ‘victim’ of geopolitics and the global power gap.

The Ecnomic Survey stated that domestic consumption is driving the Indian economy and has become the major source for stability, with rural demand buoyed by strong agricultural performance and urban spending improving on the back of tax rationalisation measures that increased household disposable incomes. Low inflation, stable employment, and rising purchasing power are supporting broad-based demand momentum, the Survey said.

Despite heightened global volatility, India’s external position remains strong. Adequate buffers and a manageable external balance have helped contain spillovers from global shocks. However, the Survey highlighted the recent weakness of the Indian rupee, which has lost more than 6 per cent against the US dollar over the past year. Chief Economic Adviser V. Anantha Nageswaran said the rupee’s valuation “does not accurately reflect India’s stellar economic fundamentals.”

The depreciation has been driven largely by an exodus of foreign portfolio investments, first due to valuation concerns and later due to strains in trade and diplomatic relations with the US. Domestic factors such as robust growth, low inflation, rising forex reserves, strong corporate balance sheets, and policy reforms have not halted the rupee’s decline.

The Economic Survey highlighted that India’s forex reserves are robust and can cover over 11 months of imports as of January 16, 2026, and roughly 94 per cent of external debt, providing a comfortable liquidity cushion. The Survey also focused on the need to generate sufficient investor interest and boost export earnings in foreign currency to meet rising import bills, even as domestic indigenisation efforts progress.

The Chief Ecnomic Advisor Anantha Nageswaran lauded India for much needed strategic diversification of export destinations, citing new trade agreements with the UK, European Union, New Zealand, and Oman. At the same time, he warned that recent curbs on Indian immigrants abroad could affect remittances, which remain an important source of external capital.

The Economic Survey pegged India's medium term growth at 7%. Looking ahead, the Survey said India’s medium-term growth trajectory remains strong, supported by ongoing reforms and stable macroeconomic conditions. Overall, it concluded that while global uncertainties persist, India’s economy is well-placed to maintain growth and resilience in the coming years.