Knowledge Nugget | Economic Survey 2025-26: Key takeaways for your UPSC exam

#2 External sector

The total exports from India in FY25 was USD 825.3 billion, registering a 6.1 per cent year-on-year growth, driven primarily by robust growth in services export which was USD 387.6 billion. The Current Account Deficit remains modest, supported by net inflows from services exports and remittances that offset the merchandise trade deficit.

The expanding network of free trade agreements (FTAs) finalised by India over the years is supporting the country’s trade strategy by providing reliable market access amid global uncertainties.

#3 Agriculture and Food Management

Agriculture and allied activities contribute nearly one-fifth of India’s national income but account for 46.1 per cent of the workforce, making the sector central to the country’s overall growth trajectory, the survey underlined.

India’s agriculture sector faces significant sustainability and productivity challenges despite recent growth, the Economic Survey stated. The survey called for key reforms, including overhauling the fertiliser sector, boosting research and development, strengthening irrigation systems and promoting crop diversification, PTI reported, quoting the survey.

#4 Environment and Climate change

The Economic Survey said that global capital markets were flush with funds, but very little money was being directed for climate action. It said domestic financial resources were proving insufficient for its investment requirements for green transition. Developing countries, excluding China, were getting just about 15 per cent of international climate finance, it said.

#5 Health

The survey emphasises a strategic shift in India’s health policy from a treatment-centric model to a public and preventive healthcare–led approach, recognising that long-term economic productivity depends on healthier human capital. A major concern flagged is the rapid rise of digital addiction and screen-related mental health issues, among children and adolescents.

On mental healthcare delivery, the survey proposes expanding the national Tele-MANAS programme beyond crisis counselling to actively address digital addiction. The Survey recommends structured interventions including cyber-safety education, peer-mentor programmes, mandatory physical activity in schools, parental training on screen-time management, age-appropriate digital access policies, and platform accountability for harmful content.

#6 Education

The survey highlights the need to retain school students beyond Class 8 as the secondary age-specific net enrolment remains low. According to survey, while India has achieved near-universal enrolment at the school level, it cautions that gains in enrolment have not translated uniformly into learning outcomes, particularly beyond the elementary stage, where net enrolment rate (NER) remains low at 52.2 per cent.

Improving infrastructure, teacher skills through strengthened District Institute of Education and Training and State Council of Educational Research and Training, and involving parents and communities in governance can create an inclusive, learner-focused environment, it suggested.

In the Economic Survey presented to Parliament by Finance Minister Nirmala Sitharaman, the government said global experiences of the last few years had brought in greater realism in the discourse around climate change (Source: Screengrab from Sansad TV)

#7 Evolution of AI ecosystem in India

Arguing that India should focus on a guarded stance on AI amid heightened uncertainty and resource constraints, the Economic Survey, said that the country’s AI strategy must be carefully sequenced to avoid premature lock-ins or regulatory overreach. India should build coordination first, capacity next, and binding policy leverage last, allowing institutions and markets to co-evolve.

#8 Inflation

“Inflation has moderated to historically low levels, although some firming is expected to occur going forward,” says survey. The retail inflation (CPI) has followed a clear downward trajectory, reaching 1.7 per cent in 2025–26, driven primarily by a steep decline in food prices.

#9 Three Global Scenarios for 2026

For the coming year, the Survey detailed three possible scenarios of global crises — ‘business as in 2025’, disorderly multipolar breakdown, and a systemic shock cascade in which financial, technological, and geopolitical stresses amplify one another rather than unfolding independently. Out of these three case scenarios, the common risks for India will be “disruption of capital flows” and the “consequent impact on the rupee”. “Only the degree and the duration will vary,” it said.

#10 Swadeshi as a disciplined strategy

Swadeshi is “inevitable and necessary” as the global trading environment is marked by export controls, technology denial regimes and carbon border mechanisms that signal the end of “naïve globalisation”, Economic Survey 2025-26 said. Indian corporates have a relative “lack of appetite” to invest efforts towards long-term risk absorption and becoming globally competitive.

Making the case for transformation in corporate culture, Survey said that India is now operating in an environment where access to inputs, technologies, and markets cannot be assumed to be frictionless or permanent.

India has made steady progress in the logistics sector. Logistics costs have been declining and were estimated at around 7.97 per cent of GDP in FY 2023–24, broadly comparable with global benchmarks.

#11 Concern on fiscal populism

The survey flagged concerns about fiscal populism, the crowding out of capital expenditure by cash transfers, and the rise of revenue deficits in states, with revenue surplus states reducing in number from 19 in FY19 to 11 in FY25.

#12 Recommendations

Dependent on global capital flows, India has to plan for liquidity and external capital buffers in the coming year, the Survey said. The negative effects of the ongoing global political and economic turmoil may manifest with a lag, and India runs the risk of contraction in liquidity,  disruption of capital flows, and a consequent impact on the rupee. Capital flight, including with the advent of the US stablecoins, is another risk to watch out for.

Proactive reforms are essential to attract more foreign investment, it said. India also needs to generate sufficient investor interest and export earnings in foreign currency to cover its rising import bill, as, regardless of the success of indigenisation efforts, rising imports will invariably accompany rising incomes, the Survey said.

BEYOND THE NUGGET: About the Economic Survey

1. The Economic Survey is a detailed report of the state of the national economy in the financial year that is coming to a close. The first Economic Survey was presented for 1950-51 and until 1964, it was presented along with the Budget.

2. Between 2010-11 and 2020-21, the survey was presented in two volumes. The additional volume carried the intellectual imprint of the CEA and often dealt with some of the major issues and debates facing the economy. From 2022-23, the survey reverted to a single volume format.

3. The government is not constitutionally bound to present the Economic Survey or to follow the recommendations that are made in it. If the government so chooses, it can reject all suggestions laid out in the document. But while the Centre is not obliged to present the survey at all, it is tabled because of the significance it holds.

 Post Read Question

Consider the following statements about the Economic Survey 2025-26:

1. Article 114 of the Constitution provides for the presentation of the Economic Survey in the Parliament.

2. The survey has raised concerns about the high food inflation rate.

3. India’s total exports have declined year-on-year due to huge tariffs imposed by the USA.

How many of the above statements is/are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

(Sources: Survey flags drying up of FDI/FII flow, Re stability, India a victim of geopolitics, capital flows disruption, Almost all of India’s climate finance needs being met domestically, but not enough, UPSC Issue at a Glance | Economic Survey 2024-25 Decoded, Economic survey)

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