Economic Survey 2026: At Near-full capacity, India needs structural reforms for faster growth, says DK Pant, India Ratings

Economic Survey offers a balanced assessment of the Indian economy's strengths and vulnerabilities while outlining the steps needed to sustain a high-growth trajectory. It has raised potential real GDP growth in the medium term (FY26-FY30) to 7.0% from 6.5% earlier.

With the economy operating close to capacity, the survey notes that structural reforms will be required to lift the investment rate and further improve total factor productivity to achieve faster growth. It projects real GDP growth for FY27 in the range of 6.8-7.2%, while the Union Budget may assume nominal GDP growth of 9.8-10.2%.

Sustained deregulation at the state level has helped small and medium enterprises expand and integrate more effectively into formal value chains, boosting medium-term growth potential. Efforts to reduce compliance and deregulate through a Cabinet Secretary-led task force set up in January 2025-covering land, building, labour, utilities and broader legal reforms-have emerged as a key reform pillar. The survey flags downside risks as largely external, including geopolitical trade conflicts, geoeconomic tariff shocks and an AI-led correction in asset valuations that could disrupt capital flows and trigger volatility in the rupee. To meet the goal of Viksit Bharat and enhance global influence, it underscores the need to strengthen state capacity, society and deregulation.