Reference Article: Editorial | The Hindu – A job well done: On the Economic Survey 2025-26
UPSC Relevance:
GS Paper III – Indian Economy (Economic Survey, Growth Strategy, Fiscal Policy, External Sector),
GS Paper II – Governance (Policy design, Centre–State fiscal relations)
The Economic Survey 2025–26, steered by CEA V. Anantha Nageswaran, stands out for its analytical sobriety at a time of global flux. Avoiding sensational forecasts, it uses current data to outline a medium-term strategy for growth and governance. The Survey argues that post-pandemic India must shift from risk aversion to a more adaptive, learning-oriented policy framework to accelerate growth.
Entrepreneurial State and Policy Vision
- Introduces the idea of an “entrepreneurial state” that is agile, experimental and willing to absorb failure
- Advocates dynamic policymaking that treats setbacks as feedback rather than policy paralysis
- Emphasises that growth acceleration requires the state to take calculated risks rather than merely regulate
Global Risks and India’s Relative Position
- Assigns a 10–20% probability of a global economic crisis in 2026 worse than 2008, with even the best-case scenario implying deterioration from 2025 conditions
- Despite this, India’s macroeconomic stability is presented as relatively strong and resilient
- The Survey balances optimism with caution by flagging emerging domestic and external risks
External Sector and Currency Dynamics
- Notes that the rupee’s depreciation does not reflect weak domestic fundamentals
- Attributes currency weakness largely to global capital flows towards AI-driven economies and safe-haven assets
- While a weaker rupee can support exports, India’s import dependence makes depreciation inflationary and costly
- Trade negotiations reveal India’s limited strategic indispensability in global merchandise supply chains
Strategic Resilience and Fiscal Policy
- Calls for building “strategic resilience” and, over time, “strategic indispensability” in global value chains
- Argues for greater fiscal flexibility at the Centre to respond to geopolitical and geoeconomic shocks
- Simultaneously warns States against fiscal populism, particularly unconditional cash transfers
- Highlights that while the Centre has sharply reduced its fiscal deficit ratio over five years, several States have slipped into revenue deficits
Emerging Structural and Social Risks
- Flags tensions between ethanol blending targets and food security
- Draws attention to the hidden costs of renewable energy transition
- Notes constraints such as fodder shortages affecting agriculture
- Unusually, but importantly, highlights the economic and social costs of “compulsive smartphone scrolling”
Overall Assessment
The Survey succeeds in setting a balanced agenda: pragmatic about global headwinds, confident about India’s relative stability, and candid about structural weaknesses. Its value lies less in prescriptions and more in clearly identifying trade-offs that policymakers must confront in the coming years.
Sample UPSC Mains Question
The Economic Survey 2025–26 advocates an “entrepreneurial state” and greater fiscal flexibility in a volatile global environment. Critically examine this approach in light of India’s structural constraints and Centre–State fiscal dynamics.