CHENNAI: While the Centre-ruling BJP-led NDA has projected the Economic Survey 2025-26 as a document of confidence, continuity and promise, the Survey itself delivers a far more guarded message, warning that India’s growth story remains exposed to global shocks, currency vulnerability, rising fiscal risks at the state level, a structurally high cost of capital and unresolved weaknesses in manufacturing, exports and human capital.
Behind the headline narrative of strong GDP growth, fiscal consolidation and macroeconomic stability, the Survey repeatedly cautions against complacency, arguing that the global economic environment has fundamentally changed and no longer rewards growth alone with stability or insulation.
“The paradox of 2025 is that India’s strongest macroeconomic performance in decades has collided with a global system that no longer rewards macroeconomic success with currency stability, capital inflows, or strategic insulation,” the Survey said, adding even well-managed economies now operate with thinner margins of safety.
A recurring concern in the Survey is the underperformance of the Indian rupee, which it says has weakened despite strong growth, contained inflation and improved fiscal metrics. The document links this directly to India’s structural dependence on foreign capital inflows to finance a persistent merchandise trade deficit.
“India depends on foreign capital flows to maintain a healthy balance of payments. When they run dry, rupee stability becomes a casualty,” the Survey states. It warns that global geopolitical fragmentation and trade disruptions have made capital flows more volatile and less predictable, exposing India to sustained currency pressure.
While a weaker rupee may offer temporary export relief, the Survey cautions that it also deters long-term investors, particularly when global risk appetite is fragile.
In one of its sharpest interventions, the Survey warned that with state after state splurging on populist electoral doles, states’ fiscal indiscipline will have an adverse impact on the sovereign borrowing costs.
“Rising revenue deficits and unconditional cash transfers in several States pose emerging risks,” it notes, stressing that these trends could weaken the overall macroeconomic framework.