Economic Survey: The shift India’s economy must make for resilience against forces it can’t control

It pegs GDP growth for 2026-27 in a range of 6.8%-7.2%, a bit less than this fiscal year’s estimated 7.4%, but robust in a high-flux context. It credits the Centre’s capex outlays and recent reforms for not just upping the economy’s pace of potential growth to an annual 7% from 6.5%, but also keeping inflation benign.

Macro-level stability, however, no longer lures foreign capital—the “paradox of 2025," as the survey puts it. For an economy that runs a trade deficit, this is a problem. Especially since India has been a victim of geopolitics, as it notes, citing our weak score on Lowy Institute’s Power Gap Index as a call to action. After all, while we have fared fairly well, global turmoil could yet kick in with a lag.

The survey offers a striking analysis of how 2026 might play out globally. In a best-case scenario, to which it assigns a 40-45% probability, it would be “business as in 2025," albeit marked by greater fragility and a thinner safety margin; while bouts of financial stress, trade friction and geopolitical strife would not lead to “systemic collapse," volatility could call for stepped-up state intervention.

The second scenario, equally probable, risks a “disorderly multipolar breakdown." Strategic rivalry would intensify, armed conflicts go on and security frameworks come apart. This would be a world riven by coercive commerce, pushing policy firmly into the arms of national interests and nations into unhappy trade-offs of autonomy, growth and stability.

The least likely scenario (10-20% likelihood) is of financial, technological—think of what an AI bubble burst might do—and geopolitical quakes amplifying one another, with a fallout worse than the Great Recession.

While the survey sees India better placed than others to ride out these scenarios, we cannot hope to escape unscathed. How best to enhance resilience?

Address capital flows as a point of vulnerability. Bond yields have hardened despite a fiscal pullback, making sovereign debt issuance dearer. For enduring relief from high capital costs across the economy, the survey wants us to work on reducing the risk premium we pay global investors.

This demands a structural shift. We must transform our story of endless external deficits into one of sustained surpluses. This, in turn, calls for export competitiveness—with manufacturing in focus, as services success will not suffice. What businesses must rely on is cheaper credit as India’s external balances improve, rather than protectionist barriers.

The survey is clear that while self-reliance has gotten more critical as supply-shock risks rise, we still need an import regime that does not keep input costs high for exporters. This is an argument that our customs policy must respond to.

The survey has a snappy analysis of ‘economic statecraft,’ though its advocacy of an ‘entrepreneurial state’ may not convince folks who want the economy’s emergence to be more market- than state-led.

While its coverage of AI risks, digital addiction, et al, seems to favour an active state, it also advocates light regulation in its emphasis on process over policy reforms. Like productive capacity, institutions matter for national power, it argues, but can be handicaps if they “mistake procedure for purpose." This could spell a ‘Catch-22’ of rules turning irrational. Fair point. But it’s also a hazard hard to avoid whenever the state plays an active role.