India's economic engine is expected to maintain its momentum into the next fiscal year, with the Economic Survey 2025-26 projecting a real GDP growth rate between 6.8% and 7.2% for FY27. This outlook follows a strong performance in FY26, where the economy is estimated to grow at 7.4%, reinforcing India's position as the world's fastest-growing major economy for the fourth consecutive year.
The Survey highlights a significant upgrade in India's medium-term potential growth rate, raising it to 7.0% from the previous estimate of 6.5%. This upward revision is attributed to among other infrastructure expansion -- The doubling of the airport network over the past decade and rapid growth in inland waterway freight have significantly eased logistics constraints. Other key drivers mentioned are supply-side strength and structural reforms -- sustained domestic reforms and public investment are now realizing the economy's underlying growth capacity.
Government analysts characterize FY27 as a year of adjustment. While growth remains robust, the slightly moderated range reflects a period where firms and households will adapt to major structural changes implemented in FY26, such as the radical overhaul of the Goods and Services Tax system; faster progress on state-level deregulation is enabling small and medium enterprises to integrate into formal value chains; and the implementation of new labour codes and further simplification of compliance requirements.
Sectoral drivers and emerging frontiers
The Survey projects that domestic demand and investment will continue to gain strength in FY27. Key sectoral highlights include:
Services as a stabilizer: The services sector continues to act as a "high-growth, low-volatility anchor," with medium-term growth projected at 7% to 8%. New frontiers such as the "Orange Economy" (experience-led services) and space services are identified as emerging opportunities.
Manufacturing momentum: The focus is shifting from technology adoption to becoming a global innovator, with the National Manufacturing Mission aiming to boost the sector's GDP contribution significantly by 2035.
Agriculture Stability: Favourable monsoons and steady growth in allied activities like livestock (averaging 5–6%) provide a reliable base.
Despite the positive domestic outlook, the Survey cautions that the external environment remains "dim" and uncertain. Geopolitical tensions, trade conflicts, and the migration of national security tools into trade policy—collectively termed "economic statecraft"—pose ongoing risks to global trade and capital flows. To counter this, the Survey advocates for "strategic indispensability"—ensuring India offers critical goods and services in global value chains that cannot be easily substituted.