“We aren’t poor by nature; we’re poor by coverage.”
— Nani Palkhivala, eminent lawyer and economist
We should always be capable to say in the future,
“We aren’t wealthy by nature; we’re wealthy by coverage.”
— Dr Raghuram Rajan, former Governor, RBI
V Anantha Nageswaran, the Chief Financial Advisor to the Authorities of India, cited the above traces to emphasize the significance of coverage throughout his press briefing after the discharge of the Financial Survey 2025–26 on Thursday. As I listened to these phrases, it was onerous to not really feel that the Survey was talking as a lot to policymakers because it was to residents who sense that India is at an inflection level.
The Financial Survey 2025–26 presents India’s scorching progress story on one aspect whereas recommending essential coverage reforms and methods required at this juncture on the opposite. The Survey, unfold throughout 16 chapters and 739 pages, provides a wealthy evaluation of the present state of the Indian financial system. Most significantly, it locations a pointy give attention to social points which, if not addressed now, may backfire and dilute India’s demographic dividend. What struck me is that the Survey doesn’t sugar-coat these dangers; it flags them bluntly, maybe recognising that point is now not on India’s aspect. Let me start there.
India’s social challenges
1. Weight problems
A big proportion of Indians is affected by weight problems, with severe penalties for bodily, psychological and emotional well being — outcomes which can be as essential for financial progress as abilities and schooling. Weight problems is rising at an alarming fee, pushed by unhealthy diets, life-style modifications, more and more sedentary behaviour, increased consumption of ultra-processed meals (UPFs), and environmental elements, because the Survey notes.
Studying this part, I felt the Survey was quietly asking an uncomfortable query: what use is fast progress if it produces a much less wholesome workforce?
In accordance with estimates, over 3.3 crore youngsters in India have been overweight in 2020, a quantity projected to rise to eight.3 crore by 2035. This pattern threatens India’s demographic dividend. The CEA has advised higher transparency in meals labelling and stronger motion by the personal sector. Folks should know what they’re consuming.
In my opinion, that is one space the place coverage timidity may show expensive; tender nudges is probably not sufficient to counter onerous industrial incentives.
2. Digital dependancy
Digital dependancy is more and more impacting psychological well being—the flip aspect of low cost information. As per the ASER survey, solely 57% of youngsters aged 14–16 use cell phones for academic functions, whereas 76% use them for social media, contributing to anxiousness and depressive signs.
I discovered this maybe essentially the most sobering statistic within the Survey, as a result of it hints at a era rising up distracted, anxious and underprepared regardless of unprecedented entry to data.
India’s fiscal and progress story in a turbulent world
Regardless of the great uncertainty going through the worldwide financial system, India stays secure and on a powerful progress path. The Financial Survey has projected GDP progress of 6.8%–7.2% for FY27 and highlighted scores upgrades by three main companies. Development is increased than pre-pandemic ranges, fiscal targets have been met, and home demand stays strong.
There’s a quiet confidence on this part of the Survey, and, frankly, it feels earned.
The Survey notes that India is now anticipating a full-year actual progress fee of over 7%, with one other 12 months of progress at or close to that stage. Whereas the worldwide surroundings has change into extra unpredictable and harmful, India continues to chart a gradual progress trajectory.
In accordance with the First Advance Estimates for FY26, the fiscal deficit is projected at 4.8% of GDP, decrease than the budgeted 4.9%. The federal government has introduced a goal of 4.4% for FY27, fulfilling its dedication made in 2021 to scale back the Union fiscal deficit by greater than half from 9.2% in FY21.
To my thoughts, this self-discipline issues greater than it’s typically given credit score for, particularly in a world that punishes fiscal slippage swiftly and harshly.
Fiscal self-discipline and FDI
Referring to RBI information, the Survey stated gross FDI inflows into India stood at USD 81.0 billion in FY25, a 13% improve from USD 71.3 billion in FY24. Whereas this represents a marginal enchancment, FDI inflows have slowed over an extended interval, largely on account of international turmoil, in accordance with the CEA.
He defined that international FDI flows have weakened total, at the same time as India’s gross inflows have risen. Internet FDI, nevertheless, stays subdued on account of revenue repatriation by buyers. Commerce tensions and coverage uncertainty are holding overseas buyers again, a pattern additionally mirrored in rupee depreciation.
I discovered this clarification essential as a result of it pushes again towards the straightforward narrative that forex weak spot routinely alerts home fragility.
The Survey makes a broader level on the price of capital. A rustic that persistently runs present account deficits and will depend on overseas financial savings should, by definition, pay a threat premium to international capital. India’s long-term problem is just not merely managing liquidity or credit score cycles however remodeling itself right into a surplus-generating financial system. Solely then can the price of capital fall sustainably.
This argument deserves to be on the centre of India’s long-term financial technique slightly than on the margins of coverage debate.
Importantly, the Survey additionally highlights that the Internet Zero transition is crucial on this context, as decrease power prices would meaningfully cut back capital prices for companies.
Seen this manner, local weather motion stops being aspirational and begins wanting economically inevitable.
Want for Swadeshi and state-level reforms
The thought of Swadeshi has existed for many years, and the federal government has pushed Atmanirbhar Bharat lately. The Survey reinforces this agenda within the context of rising international unpredictability, positioning self-reliance as a resilience technique slightly than isolationism.
I learn this much less as a name for inwardness and extra as a warning towards strategic complacency.
The CEA has urged states to prioritise deregulation to spur enterprise exercise and nurture an entrepreneurial mindset. Bureaucracies, he stated, should transfer away from colonial-era considering. Quoting economist Mariana Mazzucato, he argued that India must evolve into an “entrepreneurial state”.
An entrepreneurial state, as described within the Survey, is one which acts earlier than certainty emerges, constructions threat slightly than avoids it, learns systematically from experimentation, and corrects course with out paralysis.
It is a direct problem to the consolation of procedural governance.
The execution problem
The Financial Survey presents a number of concepts to policymakers. Whether or not these translate into outcomes relies upon solely on execution. Final 12 months, the CEA argued for a realistic method to Chinese language FDI and a sharper give attention to ease of doing enterprise, issues that stay related.
This 12 months, at the same time as inflation stays low on paper, costs proceed to really feel uncomfortably excessive for households. With international uncertainty rising, corporates are holding again on contemporary funding, preferring warning over growth. This places the onus squarely on the federal government: will it take severe be aware of the CEA’s solutions, or permit weak personal capex and muted sentiment to change into a longer-term drag on progress?
If I’ve one concern after studying the Survey, it’s this persistent hole between prognosis and supply.
India has articulated formidable targets: Viksit Bharat by 2047 and Internet Zero by 2070. I consider these are achievable, however perception alone won’t ship them. With out sturdy, strategic and coordinated implementation throughout the Centre and the states, these milestones will stay aspirational slightly than transformational.
In the long run, Palkhivala and Rajan are proper. Wealth is just not future; it’s design. And design, with out disciplined execution, is simply one other superbly worded doc gathering mud on a shelf.
HERE IS THE LIST OF STORIES THAT WE WROTE BASED ON THE ECONOMIC SURVEY.
(Editor’s be aware is a column written by Amol Dethe, Editor, Click on right here to learn extra of his articles exploring a number of buzzing matters)
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