There are three ways to ingest India’s Economic Survey. The first is the hard way: to wade through the full set of dense PDF chapters and draw your own conclusions. The second is the easy way: to skim the government’s glossy, graphic-rich summary and press notes—and come away reassured that India is shining once again. The third is the honest way: to read the succint article below, which begins with what the Survey gets right, but also brings into view the vulnerabilities that lie beneath the headline story.
The Economic Survey of India (2025-26)
Tabled today by Finance Minister Nirmala Sitharaman in both Houses of Parliament, the Economic Survey (2025–26) is, in effect, the prelude to the Union Budget scheduled to be presented on Saturday, 1 February. The 739-page comprehensive document offers a celebratory narrative of resilience and recovery; yet its subtext—not easily discernible on a first or cursory reading—quietly flags deep structural vulnerabilities that policy-makers, analysts, opposition parties, and the common citizen can ill afford to ignore. An honest reading must therefore begin with the genuine gains, before turning to the fragilities embedded in the small print.
Bright spots and headline gains
The Survey projects India to remain the fastest-growing major economy, with real GDP growth in the 6.8–7.2 per cent range in FY27 on the back of strong services and robust domestic demand. Private consumption has grown around 7 per cent and now accounts for roughly 61.5 per cent of GDP, the highest share in over a decade, suggesting a broad-based revival rather than a narrow export- or stimulus-led bounce. Inflation has eased into the comfort zone, helped by lower core inflation and relatively stable fuel prices, giving macroeconomic policy more room for manoeuvre.
On the supply side, services continue to power growth, with services GVA expanding at over 9 per cent, even as manufacturing and construction have benefited from a sustained public capex push. Central government “effective capital expenditure” has risen from a pre-pandemic average of about 2.7 per cent of GDP to nearly 4 per cent in FY25, while state capex has been broadly maintained around 2.4 per cent of GDP under incentivised schemes. This is visible on the ground in highways, railways, logistics and power, with installed power capacity crossing 500 GW and the system reporting a nil demand–supply gap at the national level.
The financial sector, once the Achilles’ heel of the economy, is showcased as a new strength. Gross non-performing assets of banks have fallen to a multi-decadal low of about 2.2 per cent, with net NPAs down to roughly 0.5 per cent, while credit growth has picked up to the mid-teens. Production Linked Incentive schemes across 14 sectors are credited with more than ₹2 lakh crore of actual investment, nearly ₹19 lakh crore of incremental production and over 12 lakh jobs, and sovereign rating upgrades by major agencies are presented as external validation of improved macro fundamentals.
On inclusion, the Survey highlights over 55 crore Jan Dhan accounts, with a majority in rural and semi-urban areas, and a rapid expansion of the financial inclusion index. Employment indicators, including PLFS and EPFO data, are marshalled to argue that unemployment has fallen and formalisation has accelerated, while skill schemes and a revamped ITI network are projected as responses to the future of work. In its own words, India has moved from “swadeshi” defensiveness to “strategic resilience”, seeking to combine self-reliance with deeper global integration.
Ten “ugly” or underplayed weaknesses
Read more closely, however, the Survey’s chapters and footnotes disclose at least ten areas of concern that do not sit easily with the upbeat headline story. These are less about policy intent, which the Survey insists is abundant, and more about institutional capacity, distributional stress and hidden risks.
Persistent, uneven job quality
While headline unemployment rates have improved, the Survey itself concedes continuing “skill gaps” and mismatches in the labour market, with a large proportion of employment still informal or low productivity. The heavy emphasis on platforms like the National Career Service—59 million registered jobseekers against far fewer actual placements—implicitly acknowledges that growth has not translated into secure, high-quality jobs at the desired scale.
Rising consumer and unsecured credit risks
Deep in the financial-sector discussion lies a warning about the surge in unsecured retail lending by NBFCs and digital lenders, and the growing retail participation in equity markets. The Survey flags this as a regulatory concern, because a correction in asset prices or a spike in interest rates could expose over-leveraged households and non-bank lenders, eroding the very “multi-decadal low” NPA gains it celebrates.
State-level fiscal stress behind the aggregate numbers
At the Union level, fiscal consolidation appears on track, but the Survey notes that state fiscal deficits are running at around 3.2 per cent of GDP, with rising pressure from subsidies and stagnant own-tax revenues. This quiet reference to “emerging pressures” in state finances hints at a future where capital expenditure and welfare promises collide, especially in fiscally weak states heavily dependent on central transfers.
Manufacturing under strain despite PLI success stories
Against the celebratory narrative on PLI, the Survey’s discussion of the real economy admits that India’s manufacturing sector continues to face headwinds from weak global demand. The celebrated production numbers are concentrated in a few sectors such as electronics and pharmaceuticals, while broader manufacturing has yet to become a consistent, employment-intensive engine of growth.
Regional inequality in services-led growth
Services drive overall expansion, but the Survey’s own data show that a handful of states—Maharashtra, Karnataka, Tamil Nadu, Gujarat and Uttar Pradesh—account for over half of India’s services GVA, while 19 other states together contribute only about a quarter. This lop-sided geography of services-led growth risks hardening regional disparities in incomes, infrastructure and opportunities.
Stressed public–private partnership (PPP) pipeline
In the infrastructure chapter, the Survey candidly notes that PPP outcomes have been weakest where land acquisition, statutory clearances, demand assessment and utility shifting remain unresolved, and that these problems continue in several states and cities. It admits that incomplete risk-sharing frameworks and weak institutional capacity still constrain PPP uptake, signalling that the long-promised shift from public projects to PPPs remains work in progress.
Institutional capacity as the “binding constraint”
Perhaps the most striking admission is conceptual rather than numerical: the Survey says India’s most consequential constraint is no longer lack of ideas, intent or resources, but the incentive structures within institutions that shape how decisions are taken under uncertainty. It warns that where delayed gratification weakens, systems substitute “shortcuts for capability, visibility for depth, and speed for learning”, a devastating internal critique of bureaucratic and political incentives.
Agriculture’s structural vulnerabilities and rural fragility
While rural consumption is described as “bolstered” by good agricultural performance, the broader picture in previous summaries is of low farm incomes, high dependence on monsoons and continuing volatility in food prices due to weather and supply disruptions. The Survey acknowledges that food price spikes remain a recurrent risk and that subsidies and procurement policies weigh heavily on both Union and state finances, even as diversification away from water- and subsidy-intensive crops is slow.
Financial deepening without commensurate consumer protection
The expansion to 55 crore bank accounts and rising financial inclusion indices is rightly celebrated, but the Survey’s concern over digital lending practices and regulatory capacity suggests that millions of new entrants are exposed to complex products and aggressive marketing. In the absence of robust dispute resolution and literacy, inclusion can easily become over-indebtedness—an asymmetry the glossy infographics cannot conceal.
External and geopolitical headwinds underestimated in tone
Finally, the Survey does acknowledge that a “fog of uncertainty” hangs over the global economy, with geopolitical tensions in Europe and West Asia and financial-market volatility posing risks to exports, capital flows and energy prices. Yet the overall narrative sometimes glides too quickly over how a sustained global slowdown, trade fragmentation or supply-chain reconfiguration could derail the optimistic growth path it sketches.
Taken together, these ten strands suggest that India’s challenge is less about generating growth in a benign year and more about building resilience in the face of shocks to jobs, state finances, credit quality and the external environment. The Survey’s own language on institutional incentives and state capacity makes clear that these are not technical glitches but structural issues.
A cautiously optimistic closing
The Survey repeatedly returns to the theme that in a world defined by uncertainty, the winners will not be the most controlling states but those that learn fastest and adapt most intelligently. That insight deserves to be taken more seriously than some of the triumphalist commentary surrounding the document. For India, “strategic resilience” must mean more than self-congratulation on growth rates; it demands the agility to recalibrate foreign policy, trade agreements and tariff structures so that domestic producers are not smothered, nor consumers—especially the poor and marginal farmers—left at the mercy of volatility.
In practical terms, this calls for a fine balance: lowering trade barriers where it enhances competitiveness and consumer welfare, but sequencing and cushioning adjustment so that small manufacturers and fragile rural economies are not simply outcompeted into oblivion. It also requires fiscal transparency and institutional honesty, so that hidden stresses in state budgets, financial markets and agriculture are confronted early rather than buried beneath ratings and slogans. If India can match its evident macroeconomic strengths with such nimble, evidence-based course correction, the optimism of this Economic Survey will be justified—not as propaganda, but as a realistic reading of an economy learning to be both strong at home and competitive abroad in an unsettled global order.