Economic Survey 2026: Growth Outlook as Rupee Hits 91.7

Introduction: Setting the Stage for the Union Budget

On January 28, 2026, Finance Minister Nirmala Sitharaman is set to present the Economic Survey to Parliament, marking the official start of the budget session. This crucial document serves as the government's annual report card on the economy, providing a detailed review of the past year's performance and outlining the policy direction for the fiscal year ahead. Presented just three days before the Union Budget 2026, the survey sets the tone for the fiscal roadmap and is closely watched by investors, analysts, and the public for insights into the government's priorities. This year's survey arrives at a critical juncture, with the Indian economy navigating a complex global environment marked by trade tensions, currency volatility, and persistent geopolitical risks.

The Economic Backdrop: A Challenging Environment

The Indian economy is currently grappling with significant external pressures. The Indian rupee has depreciated to a record low, trading at approximately 91.7 to the US dollar. This weakness is driven by persistent capital outflows, with foreign investors repatriating funds following a sharp stock market sell-off that has erased $160 billion in value so far this year. Foreign investors have withdrawn nearly $1 billion from Indian equities in January alone, compounding the outflows of roughly $18 billion seen in the previous year.

Adding to the pressure are US tariffs of up to 50% on Indian exports, which include a 25% additional levy linked to the purchase of Russian oil. In response to these trade challenges, India has secured a free trade agreement with the European Union, a move widely seen as a strategic hedge against volatile US trade policies. Despite these headwinds, domestic growth signals, including strong manufacturing and services PMIs in January, indicate underlying resilience.

Key Expectations from the Survey

Market participants will be scrutinizing the Economic Survey for several key signals. The foremost among these will be the government's GDP growth projections for the upcoming fiscal year, FY27. After a surprisingly strong performance in FY26, the outlook is expected to be more cautious due to intensifying global headwinds. Major international institutions like the IMF, World Bank, and the Asian Development Bank have already projected India’s growth in a lower band of 6.3% to 6.5% for FY27.

The survey is also expected to provide an updated roadmap for the government's reform agenda, potentially extending the 'Ease of Doing Business 2.0' framework introduced in the previous edition. This initiative focuses on reducing administrative barriers and streamlining processes to improve business outcomes. Furthermore, the document will offer insights into the government's assessment of macroeconomic stability, covering inflation, the fiscal deficit, and the current account balance.

Market Volatility and Currency Pressures

The currency market reflects the prevailing uncertainty. The rupee's slide to an all-time low underscores the impact of sustained foreign portfolio selling and strong dollar demand from importers. The table below highlights the rupee's performance against major currencies as of January 28, 2026.

This sustained pressure on the rupee has significant implications for import costs, inflation, and corporate earnings, making the government's fiscal and monetary policy stance a key focus of the upcoming budget.

The Political Arena: Budget Session Flashpoints

The budget session is also set to be a politically charged affair. The opposition is preparing to challenge the government on a range of critical issues. These include the impact of US tariffs, India's bilateral ties with China, the scrapping of the MGNREGA scheme, and new UGC 2026 norms that have sparked controversy. The alleged misuse of central agencies is another point of contention that the opposition plans to raise. With elections scheduled in four states and Puducherry, the fiscal announcements in the budget will carry additional political weight, as parties look to address voter concerns through potential relief measures and new schemes.

Safe-Haven Demand: A Surge in Gold and Silver

Reflecting the heightened global and domestic uncertainty, there has been a significant surge in demand for safe-haven assets like gold and silver. Gold prices have touched record highs, with investors seeking protection against currency debasement and inflation. This trend is not unique to India; central banks worldwide have been aggressively purchasing gold to diversify their reserves away from the US dollar.

Silver has also seen a dramatic rally, driven by both its role as a precious metal and its growing industrial demand in sectors like renewable energy, electronics, and electric vehicles. The combination of strong investment inflows and structural supply deficits has created a tight market, leading to sharp price increases. Analysts remain bullish on precious metals, suggesting that prices could climb further if global risks intensify.

The Road to the Union Budget 2026

The Economic Survey, presented by Chief Economic Adviser V. Anantha Nageswaran, will provide the analytical foundation for the Union Budget speech, which Finance Minister Nirmala Sitharaman will deliver on February 1. This will be her ninth consecutive budget, the longest streak by any finance minister. Despite the speech falling on a Sunday, the markets will remain open to react to the announcements. All eyes will be on key areas such as sector-specific allocations, potential updates to income tax slabs, and measures aimed at boosting exports and manufacturing.

Conclusion: Navigating an Uncertain Path

The Economic Survey 2026 is more than just a statistical compilation; it is a statement of intent from the government. It will offer a comprehensive diagnosis of the Indian economy's health and articulate the strategic priorities for navigating a period of significant global uncertainty. As India aims to sustain its growth momentum, the policies and projections laid out in the survey and the subsequent budget will be critical in shaping the economic trajectory for the year ahead.