Economic Survey projects 6.8–7.2% growth in FY27, flags rupee undervaluation

New Delhi, Jan 29: Finance Minister Nirmala Sitharaman, on Thursday, tabled the Economic Survey 2025-26 in the Lok Sabha, an annual report card of the country's economic performance in the financial year.

The Economic Survey projected the GDP growth in the range of 6.8-7.2% for the next fiscal year on the back of the cumulative impact of reforms, and said the economy remains on a stable footing.

The projection is a tad lower than the estimates of 7.4% in the current fiscal.

Amid the domestic currency depreciating steeply in recent months, the Economic Survey 2025-26 said the rupee's valuation does not accurately reflect India's stellar economic fundamentals and that the rupee is punching below its weight.

"Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now. However, it does cause investors to pause. Investor reluctance to commit to India warrants examination," it said.

The document, prepared by a team of economists led by Chief Economic Advisor V Anantha Nageswaran, however, added that a strong and stable currency is a natural corollary for achieving the goal of the Viksit Bharat and global influence. Rupee is a casualty of foreign capital flows drying up, it added.

The pre-Budget document further said that based on the broad trends observed during the year, the central government remains well on track to achieve its envisaged fiscal consolidation path, aiming to attain a fiscal deficit target of 4.4% of GDP in 2025-26.

As of November 2025, the Union government's fiscal deficit stood at 62.3% of the Budget Estimates.

The survey also noted that despite heightened tariffs imposed by the United States, merchandise exports grew by 2.4% (April-December 2025), while services exports increased by 6.5%. Merchandise imports during April-December 2025 increased by 5.9%.

The Survey said that GST rejig and other reforms converted global uncertainty into an opportunity, and the next fiscal year would be a year of adjustment as the economy adapts to these changes.

The document also said that, in most years, remittances have surpassed gross FDI inflows, underscoring their importance as a key source of external funding. As a result, the current account deficit remains moderate at 0.8 per cent of GDP in H1 FY26.

The survey is tabled ahead of the Union Budget and presents a backdrop for the policy actions to be taken in the next financial year.

The Economic Survey is an annual document presented by the government ahead of the Union Budget to review the state of the country's economy.

The Union Budget for 2026-27 will be presented by the finance minister on Sunday. This will be the ninth consecutive budget to be presented by Sitharaman, a historic first by a woman finance minister in India.

PTI