At constant prices, India’s economy is projected to expand to about ₹202 lakh crore in FY26, up from nearly ₹188 lakh crore the previous year, projecting a 7.4% growth estimate (as per the first advance estimates).

Moreover, while tabling the Economic Survey, the Finance Minister said that the economy was projected to grow at about 6.8% to 7.2% in FY27.

However, it is noteworthy that the nominal GDP is estimated to grow by just 8.0% for the current fiscal year (as per the first advance estimates). The projected nominal GDP growth for FY27 is around 10%. The best combination of real and nominal GDP is high real GDP growth paired with moderate, stable nominal GDP growth, signifying a growing, productive economy with healthy inflation.

Private Investment

Across sectors, the focus has shifted from incremental or short-term profits to medium- to long-term policy interventions in critical areas such as capacity-building, supply chains, sustainability, and decarbonisation.

While the projected growth rate signals a strong economic trajectory driven by domestic demand, the flip side is that private investment remains relatively low due to a combination of factors, including policy constraints and compliance uncertainty.  

As per the Economic Survey, public capex remains strong, but that does not directly indicate that private investment would follow suit. Unless structural complexities such as policy frameworks and the cost of capital are addressed, private investment would remain limited. 

The government has been pursuing fiscal consolidation to bring the GDP deficit to 4.4%, from the 4.8% deficit of FY2024-25. In light of this, the focus of Budget 2026 should be on reducing the fiscal deficit without decelerating the growth momentum, as investment-driven growth has been at the core of stability across various sectors over the past few years.

Amid global turmoil (which was highlighted as elevated downside risks to macroeconomic stability), private investment remains relatively low, and the growth momentum has been sustained primarily by capital expenditure.

The Economic Survey also called for private engagement for infrastructure growth. Balancing the growth curve with improved private investment is at the core of any policy decision, with experts calling for a calibrated approach. Improving the ease-of-doing business for private enterprises is imperative.

Budget Expectations Survey

Meanwhile, a budget expectations survey undertaken by Grant Thornton found that companies have been increasingly seeking stable policy frameworks, practical incentives, and smoother execution. “Across tax, trade, and customs, the survey points to a consistent theme: businesses are seeking greater clarity and predictability. Whether it is the transition to a new Income Tax Act, GST administration, or digital integration in customs, the emphasis is on stable frameworks, smoother implementation, and reduced compliance. On the personal taxation front, despite the overhaul of slab rates under the new tax regime, it seems that demand for further tweaks continues to top taxpayers' wishlist," says Richa Sawhney, Partner, Grant Thornton Bharat LLP.

In the budget survey, streamlining compliance and licensing, reducing tax uncertainty, and faster dispute resolution were recommended to improve private investment and engagement. Long-term policy intervention to reduce compliance and, thereby, enhance investment, will essentially determine growth in the long run.