Economic Survey: India an ‘Oasis of Stability’ in Turbulent World, Says CEA

 Chief Economic Advisor V. Anantha Nageswaran on Thursday said the Economic Survey 2025–26 highlights India’s economic resilience amid global uncertainty, describing the country as an “oasis of stability in a turbulent world.”

He said India’s growth momentum continues to be supported by domestic drivers, even as the global environment remains unpredictable.

“India’s growth stands out against any other part of the world,” Nageswaran said, adding that growth has accelerated alongside easing inflation.

Forex Reserves and Inflation Remain Comfortable

The CEA said India’s forex reserves have more than doubled in 11 years, rising from $341 billion to $701 billion.

“While much of it is due to the increase in gold valuations, there is an increased accretion of foreign exchange currencies as well,” he said.

On prices, Nageswaran said inflation remains benign.

“This year, it is projected to be about 1.7% on average so far for the first nine months, largely due to deflationary trends in food prices,” he said, adding that core inflation at 2.9% remains well below the 4% threshold targeted by the central bank.

Unemployment Falls, Female Workforce Participation Rises

Highlighting improvements in employment and inclusion indicators, the Chief Economic Advisor said India’s labour market outcomes have strengthened steadily since the launch of the Periodic Labour Force Survey (PLFS). “Six per cent was the unemployment rate then, down to 3.2% in 2023–24,” Nageswaran said, adding that female labour force participation has risen sharply by nearly 18 percentage points. He noted that unemployment in the first nine months of the current year has continued to ease, declining from 5.4% to 4.9% in the last quarter, while key social indicators, from rural tap water access to healthcare coverage and education outcomes, also show sustained improvement.

Capital Flows and Rupee Movements

Addressing concerns around capital flows and the rupee, CEA Nageswaran said rising global uncertainty is weighing on India’s capital account rather than its macro fundamentals. “India’s gross FDI has been growing very well, but net FDI has been on the weaker side, partly because of profit taking by investors and increased overseas investments by Indian businesses,” he said, adding that while net inflows are “not where we would like them to be, they are not alarming.” On currency movement, Nageswaran said the rupee has weakened “by about six to seven per cent in the last one year”, stressing that “it has got nothing to do with the macro picture… it is simply accounting” for a current account deficit economy that depends on imported capital.

On currency movement, he said depreciation is typical for current account deficit economies and not a reflection of weak fundamentals. “It has got nothing to do with the macro picture; it is simply accounting,” he said.

Also read: Economic Survey 26 Outlines Three Scenarios Highlight Strong Growth

Education Focus Shifts from Enrollment to Learning Outcomes

On education, he said India has largely resolved the challenge of school enrolment and is now shifting focus to learning outcomes. “Up to middle school level, enrolment is almost 100%; up to high school it’s about 80%, secondary school around 60%, and in tertiary education we are at about 32% against a target of 50%,” he said, emphasizing that the next phase of reforms must prioritise quality over access.

Infrastructure Gains Accelerate Growth

Highlighting infrastructure gains, Nageswaran said operational high-speed highway corridors have expanded nearly tenfold over the past 11 years, while inland water transport has grown at a compound annual rate of 21%. He also pointed to India’s sharp fall in data costs, among the lowest globally, along with a rise in broadband subscribers. Administrative reforms, he added, have cut application approval timelines by around 90% through the centralised Right of Way portal, easing project execution.

Rising Imports Are Natural with Economic Expansion

The CEA said rising imports are a natural outcome of economic expansion and income growth. “As the economy grows, per capita income rises, imports will inevitably rise,” he said, adding that higher exports and capital inflows are needed to finance this trend. “This is a given. China's per capita income growth went from nothing to $12,000 in the last 50 years or so. Simultaneously, imports have grown. We look at China as a major exporting power. That is true, but it also imports a lot, 3.3 trillion, importing services," he added.

Global Trade Dynamics Shift, Swadeshi Gains Relevance

Highlighting shifts in global trade, Nageswaran said economic relations are increasingly driven by strategic interests. “Trade is no longer reciprocal, markets are no longer neutral, and supply chains have become instruments of state power,” he said.

Medium-Term Growth Potential Upgraded to 7%

Chief Economic Advisor V. Anantha Nageswaran said the Economic Survey has upgraded India’s medium-term growth outlook, citing reforms and policy improvements despite global uncertainty.

“Three years ago, we wrote in the Economic Survey that the maximum potential growth of the Indian economy was 6.5%, and with reforms, it could rise to between 7 and 8% per annum in the medium term,” he said.

“This Economic Survey, despite the geopolitical environment being what it is, is confidently upgrading India’s potential growth to 7% per annum from six and a half percent three years ago.”

Outlining what the state must do to strengthen India’s economic resilience, Nageswaran stressed reforms, deregulation and a coordinated policy approach across governments. He highlighted the need for cluster-led manufacturing, reduction in input costs, reliable infrastructure, long-term policy stability and talent development to improve global competitiveness.

He also said protection for the domestic industry must be conditional and time-bound. “When we give protection to our industry from import competition, we have to link it to productivity and export performance,” he said, citing Northeast Asian economies as examples.

“Production cannot be in perpetuity, and it should be in return for productivity and export performance.”

Also read: AI-Led Shock Could Be Worse Than 2008 Crisis, Warns Economic Survey