Despite Tariff Hikes and Global Uncertainty, India’s Economy Set to Grow Up to 7.2%: Eco Survey

New Delhi: Against global uncertainty, the Indian economy is projected to perform better, with the Economic Survey 2026–27 pegging growth for the financial year 2027 at 6.8–7.2 per cent, negating the impact of the US tariff-led trade hike.

The Economic Survey, tabled in Parliament on Thursday, provided a snapshot of the health of the economy, which has lately been challenged by global trade headwinds and the depreciation of the rupee against the US dollar.

Against the backdrop of global trade uncertainty, India’s total exports (merchandise and services) reached a record $825.3 billion in FY25, with continued momentum in FY26. Despite heightened tariffs imposed by the United States, merchandise exports grew by 2.4 per cent during April–December 2025, while services exports increased by 6.5 per cent, the government said in the Survey.

The Economic Survey pointed out that growth will be largely driven by domestic demand. Private consumption and capital formation will continue to support expansion, while services remain the key contributor on the supply side. Manufacturing activity has strengthened, and agriculture has provided stability despite structural constraints, the Survey said.

The Survey noted that inflation—particularly food inflation—is expected to remain moderate throughout the year and well below the RBI’s threshold level of four per cent.

India’s external sector is placed comfortably in the short run. Foreign exchange reserves covered over 11 months of imports as of January 16, 2026, and about 94 per cent of external debt outstanding as of the end of September 2025, providing a comfortable liquidity cushion, the document said.

India’s fiscal deficit declined from 9.2 per cent of GDP in FY21 to 4.8 per cent in FY25 (Provisional Accounts) and is budgeted at 4.4 per cent of GDP in FY26. Over the same period, the revenue deficit as a proportion of GDP has narrowed steadily, reaching its lowest level since FY09. This has enabled higher capital expenditure and reflects a sustained improvement in the quality of government spending, the Survey pointed out.

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