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Economic Survey 2026 bats for simpler tax systems and decriminalisation of technical offences

The Survey projected the domestic economy to grow at 6.8-7.2% in FY27, and also lifted the country’s medium-term growth potential closer to 7%.

4 min readMumbaiUpdated: Jan 30, 2026 05:08 PM IST

The Survey noted that the country’s relatively high cost of capital is widely recognised as a constraint on private investment and long-run growth.

The Economic Survey 2025-26 called for simpler tax systems, time bound dispute resolution mechanism and decriminalisation of technical offences to foster certainty and enable effective capital mobilisation.

The Survey, which was tabled in Parliament on Thursday, said that the country’s aspiration to become a Viksit Bharat by mid-century demands a fundamental rethinking of finance, not merely as funding, but as the architecture of economic transformation.

“A nation does not develop by spending more but by expanding its productive base — enabling firms to invest and scale, households to earn and save securely, and markets to channel capital efficiently. This requires an enabling environment: rational taxation that supports enterprise, regulators that foster competition, financial markets that deepen and diversify, and administrative systems that operate transparently and promptly,” the Survey noted.

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It said fostering certainty and predictability demands, “Tax systems that are simpler and service-oriented, dispute resolution that is time-bound and fair, and the decriminalisation of technical offences”.

Regulators must promote competition and innovation while safeguarding stability. Credit and capital supply must move beyond bank dominance through deeper markets and modern financial infrastructure.

Deepening long-term finance

To finance sustained growth, the Survey said that the country must strengthen long-term capital markets.

The Survey projected the domestic economy to grow at 6.8-7.2% in FY27, and also lifted the country’s medium-term growth potential closer to 7%.

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“Corporate bond markets remain shallow and illiquid, dominated by top-rated issuers. Securitisation is limited, municipal bonds are underdeveloped, and pension and insurance funds remain conservative investors due to regulatory and cultural inertia,” it stated.

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To address these barriers, it suggested a six-point agenda — rationalising tax treatment of debt instruments; creating credit enhancement facilities for lower-rated issuers; standardising securitisation structures and disclosures; building municipal financial capacity and pooled bond mechanisms, and revising investment guidelines for long-term funds.

Such reforms, it said, would supply the scale and maturity needed for infrastructure and climate financing while lowering the economy’s cost of capital.

Elevated cost of capital hampers private investment

The Survey noted that the country’s relatively high cost of capital is widely recognised as a constraint on private investment and long-run growth.

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Over the past three decades, between 1995 and 2025, India’s weighted average long-term interest rates averaged 7.61 per cent, far above the average long-term rates seen in Canada (3.13), Italy (2.94) and Switzerland (1.04). Even so, India has maintained a favourable average long-term interest rate as compared to other emerging economies such as Indonesia (14.1), Mexico (11.05) and South Africa (9.08).

“…reducing India’s cost of capital requires attention not only to financial intermediation but also to the drivers of production, exports, and surplus generation,” it said.

Policies that support firm-level scale and deregulation, improve logistics, infrastructure, and trade facilitation, deepen technological capabilities and research and development (R&D), and enable sustained participation in global value chains can strengthen productivity and margins in manufacturing, the Survey added.