Economic Survey 2026 highlights: CEA flags skill gaps and structural risks in AI era

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Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said currency depreciation is a common phenomenon across emerging markets and not unique to India.

He said the Indian rupee’s movement mirrors trends seen in other emerging market currencies over both long-term and recent periods, reflecting global financial conditions rather than domestic macro stress.

Nageswaran said strengthening the rupee over time will depend on building manufacturing strength, adding that across successful industrialising economies, manufacturing-led export growth has preceded improvements in current account balances, foreign exchange reserves and currency credibility. He said services exports play an important but secondary role and work best as a complement, not a substitute, to a strong manufacturing base.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said emerging market economies face a key conundrum in the current global environment, where resource self-sufficiency is becoming increasingly important even as imports inevitably rise with income growth.

He said India needs to build stronger buffers, pointing to rising global commodity prices such as copper as a reminder of supply-side vulnerabilities.

Referring to China, Nageswaran said its growth in imports closely tracked the rise in per capita income, making it not just an export giant but also a major import economy. He added that India is likely to see a similar trend as incomes rise,

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said the idea of Swadeshi has evolved from self-reliance to strategic resilience and strategic indispensability.

He said Swadeshi matters because the nature of the global system has changed, trade is no longer reciprocal, markets are no longer neutral, and supply chains have become instruments of state power.

Nageswaran cited global examples such as export restrictions by China, tariffs and export licences imposed by the US, the European Union’s carbon border adjustment mechanism, and export controls on advanced technology by countries like the Netherlands and Canada.

He said in such a global environment, Swadeshi should be seen as a policy instrument rather than an ideological choice.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, cautioned that global financial markets may not be fully reflecting real-world economic uncertainty built up during the era of easy money.

He pointed to stretched valuations, noting that the Shiller price-to-earnings ratio of the S&P 500 is close to a 26-year high.

Nageswaran also flagged rising concentration risks, with the combined weight of the 10 largest S&P 500 companies increasing sharply over time, and warned of the danger of sudden and destabilising risk unwinding.

He added that global financial assets held by banks and non-bank financial institutions have expanded rapidly, raising concerns that financial markets could face sharp corrections if global conditions tighten further.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said India’s growth story sits at the intersection of global headwinds and strong domestic potential.

Explaining the current global environment, he referred to the work of a financial adviser who had outlined how policies adopted after the 2008 financial crisis, including prolonged monetary easing, asset price support and fiscal responses, laid the ground for today’s challenges such as trade wars, tariffs, financial fragility and geopolitical tensions.

Nageswaran said the unfolding global scenario should not be seen as driven by individual leaders or personalities, but as the outcome of long-running policy choices that led to lower productivity, higher inequality and weaker growth.

He added that India’s task is to navigate this environment through reforms and prudent fiscal policy while leveraging its domestic demand and structural strengths.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said India’s energy transition is not just about adding renewable capacity but also about managing its heavy resource intensity.

He said every 1 GW of solar power requires large quantities of materials, including around 18.5 tonnes of silver, 2–3 thousand tonnes of polysilicon and over 10,000 tonnes of aluminium, along with significant energy inputs.

For wind power, he said 1 GW capacity needs about 2,866 tonnes of copper and total material movement of nearly 4.8 lakh tonnes, translating into over 1,100 heavy truckloads.

Nageswaran also flagged the scale of future needs, saying India will require around 411 GWh of energy storage by 2031–32, underlining the logistical, material and manufacturing challenges that must be addressed alongside renewable expansion.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said India faces significant skilling and structural challenges as artificial intelligence adoption accelerates.

He said employers place the highest value on foundational and soft skills such as engagement, self-efficacy, adaptability, management skills and working with others, while technology skills and digital literacy rank lower, highlighting a mismatch in current education priorities.

Nageswaran said several high-skill, hands-on sectors remain understaffed, including eldercare and nursing, public health outreach, culinary arts, early and special needs education, environmental restoration and advanced tool and die manufacturing.

He also flagged structural challenges linked to AI, including high data centre resource consumption, large financial requirements for AI development, risks to labour markets, constraints on hardware access due to geopolitics, the need for data localisation to create domestic value, and continued dependence on foreign AI models for use in public administration and critical sectors.

At the briefing, the Chief Economic Adviser warned about the mental health impact of rising digital addiction, especially among young people.

Citing ASER 2024, he said only 57% of those aged 14–16 reported using phones for educational purposes, while 76% used them for social media. Nageswaran said compulsive scrolling and social comparison are linked to anxiety and depressive symptoms, adding that social media platforms use algorithms designed to maximise user engagement and time spent online, often targeting users aged 15 to 24.

He also said states such as Andhra Pradesh and Goa are discussing measures to limit social media usage, reflecting growing concern around digital addiction and mental well-being.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said the agriculture sector is seeing new growth engines but continues to face structural challenges.

He said diversification within agriculture is being led by livestock and fisheries, with average GVA growth of 6.1% and 7.2% respectively between FY20 and FY24, compared with 4.7% for the overall agriculture sector and 4% for crops.

However, Nageswaran highlighted key bottlenecks, including imbalanced fertiliser use that weakens soil health, excess stocks due to rice and wheat procurement, high carrying costs that crowd out productive spending, incentives that skew crop choices and slow diversification, and weak markets and value chains for alternative crops that raise transition risks.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said long-term fiscal sustainability will require consistency in the Centre’s efforts and greater prudence and commitment by the states.

He said the Centre’s Special Assistance to States for Capital Investment (SASCI) has successfully incentivised states to maintain capital expenditure at around 2.4% of GDP, but warned that rising state-level deficits reflect growing pressures on state finances.

Nageswaran said income transfers support households, but their impact is strongest when combined with productivity-enhancing investments, adding that fiscal indiscipline at the state level can weaken growth prospects and raise sovereign borrowing costs.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said the recent weakness in the rupee is largely due to rising global uncertainty and external capital flow dynamics rather than domestic macroeconomic weaknesses.

He said as an emerging market and capital importer, India’s capital account reflects shifts in global risk sentiment, with volatility seen in portfolio investment flows even as fundamentals remain stable.

The Survey shows that while net FDI flows have fluctuated and portfolio investments have seen sharp swings, the currency movement mirrors global factors such as tighter financial conditions and risk-off sentiment, underscoring that the pressure on the rupee is external in nature and not a result of macroeconomic instability at home.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said India has seen a major expansion in digital connectivity over the past decade.

He said data costs have fallen sharply from Rs 269 per GB in 2014 to Rs 8.3 per GB in 2025, helping improve access to digital services. The number of broadband subscribers rose from 6.1 crore in 2014 to 100.4 crore in 2025 (as of November).

Nageswaran also said the Centralised Right of Way portal, launched in 2022, has reduced approval time for telecom infrastructure from 451 days in 2019 to 40 days in 2025.

On rural connectivity, he said 13,145 mobile towers are now functional, 19,901 villages have access to 4G mobile services, and 2.14 lakh gram panchayats have been connected with broadband.

Addressing the media, the Chief Economic Adviser said growth momentum strengthened alongside a sharp easing in inflation.

He said real GDP growth rose to 7.4% in FY26, supported by stronger private consumption and investment. At the same time, headline CPI inflation fell to 1.7% in FY26 (up to December), while core inflation excluding gold and silver eased to 2.9%, indicating softer underlying price pressures.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said India’s growth has been broad-based and inclusive.

He said over 81% of rural households now have access to tap water, more than 2.9 crore houses have been constructed, and 2.76 crore property cards have been issued under the SVAMITVA scheme.

On healthcare, Nageswaran said 14.32 crore beneficiaries are registered on the U-Win portal, 42.78 crore Ayushman Bharat cards have been issued and over 1.8 lakh Ayushman Arogya Mandirs are operational.

On education, he said learning outcomes have improved at the primary level, with a higher share of students achieving grade-level reading and maths skills, while around 25 crore students are enrolled across 14.7 lakh schools nationwide.

The Chief Economic Adviser said public finances are on a firmer footing, pointing to a credible fiscal consolidation path. He said the fiscal deficit is projected to decline to 4.4% of GDP in FY26 (BE), while the primary deficit has also narrowed.

Gross tax revenue increased from a pre-pandemic average of 10.8% of GDP to 11.5% post-pandemic, with personal income tax collections rising from 2.4% to 3.3% of GDP. The number of income tax filers grew from 6.9 crore in FY22 to 9.2 crore in FY25, while effective capital expenditure rose from 2.7% to 3.9% of GDP.

Chief Economic Adviser V Anantha Nageswaran, speaking at the Economic Survey press briefing, said employment conditions have improved alongside structural reforms.

He said the overall unemployment rate fell from 6% in 2017–18 to 3.2% in 2023–24. Female labour force participation rose sharply during the same period, increasing from 23.3% to 41.7%. Monthly data for FY26 shows unemployment easing further to 4.9% by December, reflecting improving labour market conditions.

Rumki Majumdar, Economist at Deloitte India, said the Economic Survey highlights the need for India to closely monitor public debt levels even as revenues improve.

“India will have to keep an eye on the level of public debt,” she said, adding that revenues have risen from around 8.5% of GDP before the pandemic to 9.1% post-pandemic due to a wider tax base and deeper formalisation.

Majumdar said the quality of spending has improved, with revenue expenditure falling from 13.6% to 10.9% of GDP and capital outlays nearly doubling to Rs 10.5 lakh crore in FY26 (BE), helping reduce the general government debt ratio by over 7 percentage points since 2020.

Commenting on the Economic Survey 2026, Ranen Banerjee, Partner and Leader – Economic Advisory at PwC India, said the document captures India’s current phase through what he called “strategic sobriety” and the idea of “running the sprint and marathon at the same time."

He said the Survey offers an honest assessment of achievements and course corrections, describing the government as an “entrepreneurial state” focused on learning and agile policymaking.

Banerjee noted that inflation has remained contained due to supply-side efficiencies backed by high capital spending, but warned of risks to exchange rates from negative capital flows and the high cost of capital, especially due to state-level deficits.

He added that with potential GDP growth raised to 7% and FY27 growth pegged at 6.8%–7.2%, the Budget will be closely watched for steps to cut debt, reform customs duties to support MSMEs, and push states towards fiscal discipline.

Commenting on the Economic Survey 2026, Dhiraj Agrawal, CBO of Mufin Green Finance, said the projection of 6.8% to 7.2% GDP growth for FY27 confirms India’s position among the fastest-growing major economies despite global uncertainty.

He said rising industrial output, which touched 7.8% in December 2025, underlines the need to improve competitiveness in manufacturing.

Agrawal added that with the India-EU Free Trade Agreement expected to open access to a $27 trillion market, quality-driven production and global compliance will be critical for Indian exporters to gain long-term benefits.