India must align its policies to boost agricultural exports and avoid ad hoc trade restrictions that disrupt supply chains and damage the country's reputation as a reliable supplier, the Economic Survey said on Thursday.

Agricultural exports represent "low-hanging fruit with immense export potential" and carry international leverage for India, the survey said, calling for policies that balance domestic demand with export growth.

India aims to reach USD 100 billion in combined exports of agriculture, marine products and food and beverages in the next four years, up from USD 51.1 billion in agricultural exports in fiscal 2024-25.

The world's second-largest agricultural producer by value accounts for just 2.2 per cent of global farm exports, up from 1.1 per cent in 2000, according to World Trade Organisation data - a "significant untapped potential," the survey said.

Agricultural exports grew at a compound annual growth rate of 8.2 per cent between fiscal 2019-20 and 2024-25, outpacing overall merchandise export growth of 6.9 per cent.

However, agricultural exports have stagnated between fiscal 2022-23 and 2024-25, even as global agricultural trade rose to USD 2.4 trillion in 2024 from USD 2.3 trillion in 2022.

"Frequent policy changes can significantly disrupt export supply chains, create market uncertainty and cause foreign buyers to switch to other sources," the survey warned, adding that export markets once lost are not easily recovered.

India has often employed ad hoc export bans or minimum export prices to manage domestic inflation and price volatility, measures that may temporarily stabilise prices but risk longer-term reputational costs.

The survey recommended alternative policy tools to ensure domestic availability at fair prices, including subsidised food distribution, buffer stock management, market interventions and enforcement of anti-hoarding measures.

"It is possible to stabilise domestic availability and prices while enabling farmers to tap global markets for better incomes," the survey said.

India's agricultural exports accounted for 11-14 per cent of merchandise exports during the five-year period through fiscal 2024-25.

Indian corporate investment is characterised by low R&D intensity and concentration in real estate-linked, regulated, or quasi-monopolistic sectors with a relative lack of willingness and appetite to invest towards long-term risk absorption and become globally competitive, according to the Economic Survey.

In a society undergoing rapid structural change, the private sector's legitimacy will increasingly rest on its ability to marry commercial dynamism with a conscious contribution to nation-building, the pre-Budget tabled in Lok Sabha on Thursday said.

Citing historical records of instances in different parts of the world where business leaders and firms acted not merely as profit-seeking entities but as institutional partners in broader national projects at various stages, it said the Indian private sector needs to recognise its role in shaping social trust and institutional credibility.

The Survey said the Indian corporate sector operates "in a hybrid zone where rents are available, enforcement is uneven, and political mediation substitutes for market discipline".

"...there is a relative lack of willingness and appetite to invest efforts towards long-term risk absorption and becoming globally competitive.

"Regulatory arbitrage, protected margins, and firm-specific accommodations often dominate productivity enhancement, scale competition, or learning-by-doing," it said.

This preference is rational in an environment where downside risks are socialised through bailouts, banking forbearance, tariff protection, or retrospective renegotiation, it added.

"A corporate sector that externalises risk to the state does not exert pressure for higher state capacity; instead, it generates demand for discretion. Discretion, in turn, corrodes rule-based institutions," the Survey noted.

Stating that capital allocation horizons remain short among Indian corporates, it said, "Despite notable exceptions, Indian corporate investment is characterised by low R&D intensity, caution in frontier manufacturing, and concentration in real estate-linked, regulated, or quasi-monopolistic sectors." This reflects not merely culture, but governance structures -- family control, succession orientation, weak managerial labour markets, and underdeveloped long-horizon capital, it noted.

The Survey pointed out that "when firms do not require fast courts, skilled labour at scale, or predictable regulation to generate returns, they cannot function as a forcing mechanism for institutional upgrading".

The Survey cited examples of how various business leaders and firms in post-war America, Germany, and Japan acted not merely as profit-seeking entities but as institutional partners in broader national projects, particularly during periods of reconstruction or strategic transformation.

"For India, this implies a private sector that is willing to accept longer investment horizons in innovation, skills, and quality; one that treats formalisation, productivity, and technological deepening as collective goods rather than optional strategies; and one that recognises its role in shaping social trust and institutional credibility," it said.

It calls for business leadership that is comfortable with competition at global standards, that reinvests success into capability building rather than financial engineering, and that frames corporate ambition in terms of what it does for India's productive base, employment quality and international standing, the Survey said.

In a society undergoing rapid structural change, the private sector's legitimacy will increasingly rest on its ability to marry commercial dynamism with a conscious contribution to nation-building, not as a slogan, but as a guiding discipline in strategy, capital allocation and organisational culture, it noted.

There is a need to retain school students beyond Class 8 as the secondary age-specific net enrolment remains low, the Economic Survey 2025-26 said.

According to the survey tabled in Parliament on Thursday by Union Finance Minister Nirmala Sitharaman, while India has improved enrolment at early levels, the secondary age-specific net enrolment rate (NER) remains low at 52.2 per cent.

It said the scenario highlights the need to retain students beyond Class 8.

"A key issue is the uneven distribution of schools as 54 per cent of schools offer only foundational-preparatory education, while just 17.1 per cent provide secondary education in rural areas," it noted.

Urban areas have a higher share of secondary schools (38.1 per cent). This disparity, the document highlighted, limits rural students' access to higher-level classes, resulting in "transition losses, increased travel time, and higher dropout rates".

"These structural imbalances are reflected in enrolment patterns, with a drop from the foundational and preparatory levels to the middle and to secondary levels in rural areas," it pointed out.

In urban areas, though, enrolment rises from the middle to the secondary level. Grade-wise enrolment trends further highlight the decline at the secondary stage.

The survey also said that India has made notable gains in school enrolment by strengthening infrastructure and teacher capacity, with schemes like Poshan Shakti Nirman and Samagra Shiksha Abhiyan promoting access and equity.

"Further action is required, especially as the focus shifts from enrolment to learning outcomes. Policy interventions to expand composite and integrated schools, upgrading schools up to Class 7, and strengthening open schooling are vital for improving retention and optimising resources," it said.

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.

Combining these strategies with curriculum and assessment reforms aligned with the National Education Policy (NEP) and the use of digital platforms such as PM e-Vidya can provide high-quality, equitable education, even in remote areas, it underlined.

India must strengthen its industrial cluster strategy to compete globally and it requires reimagining the model as a high-productivity, reform-enabled ecosystem, according to the Economic Survey.

While India has attempted to build industrial clusters through various schemes over the past few decades, the pre-Budget document tabled in the Lok Sabha on Thursday noted that the gap between domestic strength and global competitiveness underscores the need for an upgraded cluster strategy.

"Strengthening India's global competitiveness requires reimagining the cluster model as a high-productivity, reform-enabled ecosystem," it noted.

Stating that the strategic way forward can be built on three pillars, the Survey said, "First, it (India) should prioritise scale and location by strategically identifying and anchoring large, high-potential regions in well-connected brownfield locations, ensuring the necessary scale through clear land titling and modern land pooling mechanisms." Second, an empowered institutional mechanism (like the IFSCA at GIFT City) can be granted the authority to ensure regulatory certainty and flexibility, enabling clusters to operate with globally competitive speed.

"Third, it should involve harnessing private execution by enhancing the role of private developers to masterplan, build, and operate core infrastructure, ensuring market responsiveness and efficiency," the Survey said.

Clusters designed under this framework may have the potential to become India's primary engines of growth, accelerating integration into global value chains and supporting the nation's economic growth and resilience, it added.

The Survey stated that India has attempted to build industrial clusters through various schemes over the past few decades, from the 1997 Industrial Park Scheme and the 2005 SEZ Act to the National Industrial Corridor Development Programme and sector-specific clusters for electronics, textiles, and software.

While India has several organically developed clusters that bolster domestic production, however, transforming these clusters into globally competitive ecosystems requires addressing two key structural factors -- achieving optimal scale and enhancing regulatory flexibility, it said.

The Survey pointed out that the median size of India's clusters is relatively small, often lacking the necessary land area and robust multimodal connectivity essential for global value chain integration.

Commenting on enhancing regulatory flexibility, it said frameworks governing these zones have yet to fully relax key constraints related to labour, building norms, and ease of doing business, which limit their appeal to international firms seeking speed and predictability.

India's ambition to emerge as a globally competitive industrial hub will critically depend on the strength and scale of its industrial clusters, it said.

The Survey further said evidence from across the world shows that high-performing clusters are not just contributors to industrial activity; they are central to a nation's export growth, attracting foreign investment, driving innovation and enhancing productivity.

Countries that have successfully integrated into global value chains, starting from China, Vietnam to South Korea, all have done so through a small number of highly competitive, globally connected clusters that combine economic density with institutional agility, it noted.

India's urban story is neither one of decline nor adequacy, but of unfinished promise, the Economic Survey 2025-26 said on Thursday, while observing that many urban pressures stem from persistent supply-side constraints in land, housing and mobility.

The pre-Budget document tabled in Parliament further said Indian cities are sites of daily strain: long commutes, uneven services, and shared spaces that often fall short of collective expectations.

"..India's urban story is therefore neither one of decline nor adequacy, but of unfinished promise," it said.

The Survey noted that many urban pressures stem from persistent supply-side constraints in land, housing and mobility.

"Restricted density, unclear titles and limited land recycling constrain affordable housing, while transport systems remain overly reliant on private vehicles," it said The Survey observed that core services such as sanitation, waste, and water services have expanded markedly, but must now evolve from expansion to reliability, circularity and efficiency.

"However, beneath these sectoral stresses lies a deeper institutional issue: fragmented metropolitan governance and limited fiscal autonomy for cities – to plan, finance and deliver at scale," it said.

Beyond infrastructure, the Survey said there is a need to improve the intangible foundations of urban life, such as civic norms, shared responsibility, and respect for public spaces.

The Survey pointed out that the quality of urban experience depends as much on collective behaviour as on budgets and bridges.

"Strengthening civic consciousness, alongside better institutions, is essential to creating cities that feel not only efficient but also welcoming," it said.

According to the Survey, in advanced and emerging economies alike, a small number of metropolitan regions function as nodes in global production networks, financial systems, logistics chains, and knowledge ecosystems.

"Despite India's economic scale today, its cities struggle to perform this role at the level of established global cities such as New York City, London, Shanghai, or Singapore," it said.

Concerns over fiscal populism, the crowding out of capital expenditure by cash transfers and the rise of revenue deficits in states have increased in recent times, the Economic Survey said on Thursday as it stressed that any fiscal indiscipline at the state level casts a shadow on the sovereign borrowing costs.

"While the Centre has achieved consolidation alongside record public investment, rising revenue deficits and unconditional cash transfers in several States pose emerging risks by crowding out growth-enhancing spending," the pre-Budget document tabled in Parliament said.

Among other elements, it mentioned that Unconditional Cash Transfers (UCTs) have expanded rapidly across several states and now form a growing share of state-level welfare spending.

Aggregate spending on UCT programmes, particularly for women, is estimated at around Rs 1.7 lakh crore for FY26.

With Indian government bonds now globally indexed and investors increasingly assessing general-government finances, the Survey said weak fiscal discipline at the state level can no longer be treated as locally contained; it increasingly affects the cost of sovereign borrowing.

According to the Survey, concerns over fiscal populism, the crowding out of capital expenditure by cash transfers and the rise of revenue deficits in states have increased in recent times.

"From a macro perspective, any fiscal indiscipline at the state-level also casts a shadow on the sovereign borrowing costs. With markets pricing government debt on a consolidated basis, persistent revenue deficits or an expansion of committed expenditures at the state-level could affect sovereign bond yields," the Survey said, It also emphasised the importance of coordinated fiscal discipline across levels of government, where fiscal policy is oriented toward expanding productive capacity and income growth rather than creating permanent expenditure commitments.

"Strengthening the fiscal capacity of local bodies, in line with constitutional intent, can also help improve expenditure efficiency and investment outcomes at the grassroots level," it added

Obesity is rising at an alarming rate and is today a major public health challenge in India, said the Economic Survey as it emphasised focusing on the intake of the right nutrition in their diets and treating dietary reforms as a public health priority.

Driven by unhealthy diets, lifestyle changes, including sedentary lifestyles, increased consumption of ultra-processed foods (UPFs), and environmental factors, obesity is affecting people across all age groups and increasing the risk of non-communicable diseases (NCDs) such as diabetes, heart disease, and hypertension, impacting both urban and rural populations, said the survey tabled in Parliament on Thursday.

The 2019-21 National Family Health Survey (NFHS) reports that 24 per cent of Indian women and 23 per cent of Indian men are overweight or obese.

Among women aged 15-49 years, 6.4 per cent are obese, and among men, 4 per cent are obese, the report said.

More troubling still, the prevalence of excess weight among children under five has risen from 2.1 per cent in 2015-16 to 3.4 per cent in 2019-21.

According to estimates, over 3.3 crore children in India were obese in 2020, and it is projected to reach 8.3 crore children by 2035, the survey report expressed concern.

India is one of the fastest-growing markets for UPF sales, the survey said, stating it grew by more than 150 per cent from 2009 to 2023.95. Retail sales of UPFs in India surged from USD 0.9 billion in 2006 to nearly USD 38 billion in 2019, a 40-fold rise.

"It is during the same period that obesity has nearly doubled in both men and women. This mirrors the global rise of obesity, parallel to dietary shifts," the survey said.

The UPFs are displacing long-established dietary patterns, worsening diet quality and are associated with increased risk of multiple chronic diseases, the survey said, as it called for exploring a ban on their advertisements from morning to late night.

It stated that a global team of researchers worked on the Lancet Series on UPFs and human health, consolidating the global evidence demonstrating that high UPF consumption is associated with several adverse health outcomes, such as obesity, chronic heart disease risk, respiratory issues, diabetes, mental health disorders, etc.

The rising use of UPFs imposes a substantial economic cost through higher healthcare spending, lost productivity and long-term fiscal strain.

The survey has also called for restrictions on the marketing of infant and toddler milk and beverages.

It suggested a "front-of-pack nutrition labelling" of high-fat, sugar and salt (HFSS) food with a warning, restricting marketing to children, and ensuring that trade agreements do not undermine public health policy.

Recognising obesity as a critical public health concern, the government has launched comprehensive, multi-pronged initiatives to prevent, manage and reduce obesity in the country, the survey said.

The interventions are strategically designed by multiple ministries to promote a holistic approach that integrates health, nutrition, physical activity, food safety, and lifestyle modifications (e.g., POSHAN Abhiyaan and Poshan 2.0, Fit India Movement, Khelo India, Eat Right India and 'Aaj Se Thoda Kam' campaign) and Ayushman Arogya Mandirs, the School Health Programme, and Yoga promotion continue to advance the goal of a healthier, stronger and obesity-free India.

The survey stated that the Union health ministry has issued instructions to all states and Union territories to take action for a 10 per cent reduction in oil consumption and intensify awareness through National Programme for Prevention and Control of NCDs (NP-NCD) platforms. Under the programme, over 31.5 crore adults have been screened and 8.47 crore were identified as overweight or obese.

Further, the FSSAI has launched the 'Stop Obesity and Fight ObesityAwareness Initiative to Stop Obesity' campaign to prevent obesity and reduce excessive oil consumption.

As part of the campaign, communication materials to raise awareness of obesity have been prepared in regional languages and sign language, alongside media outreach through FM radio, railway announcements, and digital platforms.

Above all, it is important for all to focus on the intake of the right nutrition in their diets, the survey report said

The Economic Survey on Thursday made a strong case for re-examining the nearly two-decade-old RTI law to exempt confidential reports and draft comments from disclosures, saying such provisions constrain governance.

It also said that the RTI (Right to Information) Act 2005 was never intended as a tool for idle curiosity, nor as a mechanism to micro-manage the government from the outside.

Its purpose is far higher, and the law itself makes that clear, it said.

The law seeks to promote transparency and accountability in the working of every public authority, to contain corruption, and to enhance people's participation in the democratic process.

"Nearly two decades on, the RTI Act may need re-examination, not to dilute its spirit, but to align it with global best practices, incorporate evolving lessons, and keep it firmly anchored to its original intent," it said.

A few possible adjustments that could be worth exploring in the law include exempting brainstorming notes, working papers, and draft comments until they form part of the final record of decision-making, the survey said.

Another option could be to protect service records, transfers, and confidential staff reports from casual requests that add little value to the public interest.

"A third might be to explore a narrowly defined ministerial veto, subject to parliamentary oversight, to guard against disclosures that could unduly constrain governance," the survey said.

It added that these are not prescriptions, but suggestions worth debating to ensure that the Act remains effective while also safeguarding the integrity of decision-making.

The law, it said, is best understood not as an end in itself, but as a means to strengthen democracy.

"The wiser path is to keep it anchored to this original aim - enabling citizens to demand accountability for decisions that affect them, while also ensuring that space for candid deliberation and respect for privacy remain protected," it said.

"That balance between openness and candour is what will keep the RTI Act true to its purpose," it added.

The idea of citizens' right to know is not uniquely Indian.

According to the Survey, Sweden pioneered it with the world's first Freedom of Information Law (FOIA) in 1766. The US enacted its FOIA in 1966, and the UK followed in 2000.

Interestingly, former UK Prime Minister Tony Blair later admitted he regretted introducing it, not because he opposed accountability, but because he felt governance itself suffered: "You can't run a government without being able to have confidential discussions with people on issues of profound importance." The UK House of Commons Justice Committee (2012–13) reached a similar conclusion, urging wider use of exemptions to protect candid internal debate.

The global experience suggests that transparency works best when paired with room for candid discussion, it said.

"By global standards, India's RTI Act is relatively expansive," the survey added.

In the US, internal personnel rules, inter-agency memos, and financial regulation reports are exempt from disclosure.

Similarly, Sweden protects fiscal and monetary policy, supervisory activities, and the economic interests of institutions under its secrecy provisions.

The UK also exempts policy formulation where disclosure may harm the public interest, with ministers retaining veto powers even against orders of courts or commissions.

And the World Bank excludes deliberative information and administrative matters from its disclosure policy.

"India, in contrast, leaves far less space for such carve-outs. Draft notes, internal correspondence, and even personal records of officials often enter the public domain, sometimes even where the link to public interest is weak," it said.

Unlike the US, the UK, or South Africa, which explicitly shield policy deliberations and draft documents, India has no general "deliberative process" exemption.

"File notings, internal opinions, and draft notes fall squarely within the Act's definition of information, with only Cabinet papers protected temporarily until a decision is made," the survey said.

Combined with a strong public-interest override that can compel disclosure even of exempt material, this makes India's RTI regime particularly broad.

"The challenge now is to preserve this openness while also retaining space for candid and effective decision-making," it added.

Further, it said the concern is predictable as if every draft or remark might be disclosed, officials may hold back, resorting instead to cautious language and fewer bold ideas.

"The candour needed for effective governance is blunted. This is not an argument for secrecy by default. Rather, democracy functions best when officials can deliberate freely and are then held accountable for the decisions they finally endorse, not for every half-formed thought expressed along the way," it said.

Asserting that only 4.9 per cent of the youth in the 15-29 age group have received formal vocational or technical training, the Economic Survey 2025-26 on Thursday called for expanding access to formal skilling and increasing the coverage of skill training programmes.

The Survey highlighted that skill education in schools would equip young people with market-aligned skills, particularly in the service sector, which absorbs over half of the formally trained youth, while reducing dropouts by linking education to economic opportunities.

It emphasised that strengthening the alignment between school education and national skilling priorities is essential for reducing the share of out-of-school children and building a productive workforce.

As India seeks to harness its demographic dividend and respond to evolving labour market needs, a well-integrated and forward-looking skilling system is critical to enabling the workforce to capitalise on emerging economic opportunities, it stated.

"Expanding access to skills and improving their quality requires a well-integrated skilling ecosystem," it said, adding that enhanced coordination across ministries and levels of government would enable the diverse skilling initiatives to improve employability, expand coverage, and better equip the workforce for technological and economic changes.

A unified apprenticeship mission may be needed to bring the National Apprenticeship Promotion Scheme (NAPS), the National Apprenticeship Training Scheme (NATS), and similar schemes under a single framework, ensuring better policy alignment and closer integration between education, skilling, and employment, the Survey observed.

The Survey also pitched for strengthening District Skill Committees as local anchors and suggested that enhanced industry participation can be encouraged through MSME cluster models and graded incentives tailored to companies based on their size.

Asserting that industry-driven skilling remains central to building job-ready talent and strengthening skill-industry linkages, the Survey calls for re-anchoring incentives around outcomes and retention, outlining that if payments, renewals and reputational credibility are tied primarily to numbers trained, the rational behaviour of the system will be to maximise throughput.

It suggests that local labour market intelligence must shape course portfolios, observing that the failure of many skilling efforts is mainly due to an inappropriate mix of courses relative to district-level demand rather than the quality of training imparted.

The Survey also advocates involving employers right from shaping course curricula to align skills with actual tasks and equipment; creating workplace learning opportunities through apprenticeships or internships; and jointly participating in assessment, ensuring that certification signals competence rather than attendance.

It further calls for advancing institutional convergence and fostering a whole-of-government approach to enable the skilling and employment initiatives to operate in a coherent manner.

According to the Survey, "There is a need to expand access to formal skilling as only 4.9 per cent of the youth (in the 15-29 age group) have received formal vocational or technical training, while another 21.2 per cent received training through informal sources".

Estimates from a 2025 study suggest that a 12-percentage-point increase in skilled workforce through investment in formal skilling could lead to more than a 13 per cent increase in employment in the labour-intensive sectors by 2030, it highlighted.

The Survey stressed the need to expand coverage of skill-training programmes while ensuring quality and alignment with market demands.

As India's skill landscape expands with a growing working-age population, skilling programmes need to work together in a mutually reinforcing way, stated the Survey, pointing out that internationally, countries are shifting towards a whole-of-government approach in skilling that enables coordination across ministries.

"As India moves ahead in its growth journey, advancing institutional convergence and fostering a whole-of-government approach would enable the skilling and employment initiatives to operate in a coherent manner. This could set the stage for a sharper emphasis on industry-driven skilling, which remains central to building job-ready talent and strengthening skill-industry linkages," noted the Survey.

It also suggested that by driving unified governance, localised implementation, and industry partnerships, India can transform its apprenticeship ecosystem to meet the evolving needs of the labour market and promote inclusivity, security, and aspiration.

According to the Survey, the convergence of policy reforms, institutional coordination, and industry engagement will position apprenticeships as a strategic lever for generating sustainable employment.

"By aligning learning with labour-market needs, vocational tracks have the potential to enhance employment prospects, facilitate smoother school-to-work (STW) transitions, strengthen workforce participation, and reduce unemployment, thereby contributing to broader economic and social development outcomes," it stated.

Gold and silver prices are expected to remain at elevated levels amid persisting global uncertainties, unless a durable peace is established and trade wars are resolved, according to Economic Survey 2025-26.

The survey highlighted that both gold and silver touched lifetime highs during 2025, reflecting heightened global uncertainty and strong safe-haven demand.

The rally was buoyed by a weakening US dollar, expectations of persistently negative real rates, and the market's growing assessment of geopolitical and financial tail risks.

"The prices of precious metals, both gold and silver, are likely to continue increasing due to their sustained demand as safe-haven investments amid global uncertainties, unless a durable peace is established and trade wars are resolved," said the survey tabled in Parliament.

On the Multi Commodity Exchange (MCX), silver futures crossed the record Rs 4 lakh per kg barrier on Thursday soaring by 6.3 per cent, while gold touched fresh all-time high of Rs 1.8 lakh per 10 grams.

Some commentators feel that the torrid pace set by gold and silver in 2025 may not be sustained, it added.

Meanwhile, gold prices ended at Rs 1,39,201 per 10 grams, while silver closed at Rs 2,35,701 per kilogram recorded on December 31, 2025, on the MCX.

In retail markets, gold and silver settled lower at Rs 1,37,700 per 10 grams and Rs 2,39,000 per kg in retail markets, recorded at the end of last year.

In FY25, India's import composition continues to be dominated by petroleum crude, gold and petroleum products, with these sectors accounting for over one-third of total imports. Gold imports increased by 27.4 per cent year-on-year (YoY) basis.

The increase in gold imports may be attributed to a rise in gold prices, increasing by 38.2 per cent (YoY) and driven by strong domestic consumption, the survey said.

Meanwhile, foreign currency assets (FCA), which form the liquid core of reserves, softened slightly from USD 567.6 billion in end March 2025 to USD 560.5 billion as of 16 January 2026.

In contrast, the gold component rose sharply to USD 117.5 billion as of 16 January 2026, compared with USD 78.2 billion at the end of March 2025, it added.

This increase reflects both valuation gains during a period of elevated global gold prices and a continued preference among central banks for diversifying into non-dollar reserve assets.

The growing share of gold in reserves aligns with a broader international pattern where many emerging markets have increased gold holdings amid geopolitical uncertainty and shifts in the global interest-rate cycle, it said.

According to the survey, gold prices soared from USD 2,607 to USD 4,315 per ounce in 2025, marking one of the steepest annual gains in recent years.

On the other hand, base metals, such as iron, copper, and aluminium, are expected to increase moderately. Copper is likely to keep its price elevated due to strong demand from green technology and data centres, coupled with supply disruptions.

However, the survey cited the World Bank's Commodity Prices Outlook, October 2025, which projected that global commodity prices are expected to decline by approximately 7 per cent in FY27, primarily driven by subdued crude oil prices amid oversupply.

"Geopolitics may come in the way of this prediction," it said.

Foreign Portfolio Investment (FPI) flows in FY26 remained volatile, leading to a net outflow of USD 3.9 billion as of December 2025, driven by elevated uncertainty and increased capital allocation towards AI-centric markets such as the US, Taiwan, and Korea, the Economic Survey 2025-26 said on Thursday.

Overall, FPIs were net sellers of Indian securities from April to December 2025. They purchased Indian debt securities while offloading equities during the period.

The sell-off from equities was mainly due to the "relative underperformance of Indian equities compared to other major markets, alongside trade and policy uncertainties, the depreciation of the Indian rupee, and abroad-based global risk-off sentiment amid elevated US bond yields, which weighed on FPI flows", it added.

These factors dampened sentiment towards Indian equities, particularly export-oriented sectors such as IT and healthcare, leading to continued FPI outflows in FY26 (April-December).

According to the Survey tabled in Parliament, "FPI flows this year have been tepid due to elevated uncertainty and increased interest in AI-related financial investments in countries such as the US, Taiwan, and Korea".

As a result, there was a balance of payments (BOP) deficit of USD 6.4 billion in H1 FY26 compared to a surplus of USD 23.8 billion in H1 FY25, which was funded by a decline in foreign exchange(forex) reserves, it added.

The Survey projected that the outlook for FPI inflows into the debt market remains positive, supported by markets regulator Sebi's relaxation of FPI investment norms and ongoing India-US trade discussions.

As of December 2025, the asset base under custody of FPIs stood at Rs 81.4 lakh crore, marking a 10.4 per cent increase from March 31, 2025, driven largely by valuation gains in equities and steady accumulation in debt holdings.

Within National Stock Exchange (NSE) listed equities, however, the share of FPI ownership declined to 16.9 per cent (for Q2FY26), in line with global risk aversion and sectoral reallocations.

In the midst of volatile foreign capital flows, domestic institutional investors (DIIs), particularly mutual funds and insurance companies, have counterbalanced FPI outflows' volatility and provided much-needed support to markets.

With continued buying, as of September 2025, DII ownership within NSE-listed equities stood at 18.7 per cent

Online platforms should be made responsible for enforcing age verification and simpler devices should be promoted for children to access educational content with safeguards to address rising problem digital addiction, Economic Survey 2025-26 said on Thursday.

The Economic Survey 2025-26 tabled in Parliament has identified digital addiction as a rising problem impacting mental health of youth and adults.

It noted measures by various countries, including Australia, China, and South Korea, and called for several interventions, besides ongoing efforts of various government departments.

"Policies on age-based access limits may be considered, as younger users are more vulnerable to compulsive use and harmful content. Platforms should be made responsible for enforcing age verification and age-appropriate defaults, particularly for social media, gambling apps, auto-play features, and targeted advertising," the Survey said.

The Survey has called for educating families and encouraged them to promote screen-time limits, device-free hours, and shared offline activities.

It has called for conducting parental workshops through schools and community centres to train guardians in setting healthy boundaries, recognising signs of addiction, and using parental control tools effectively.

"Promoting simpler devices for children, such as basic phones or education-only tablets, along with enforced usage limits and content filters, can further reduce exposure to harmful material, including violent, sexual, or gambling-related content," the Survey said.

It said network layer safeguards, such as internet service provider-level interventions, that can complement such measures by offering family data plans with differentiated quotas for educational versus recreational apps and default blocking of high-risk categories, with opt-in overrides available to guardians.

Taking cognisance of the rise in digital addiction, the Survey has called for comprehensive interventions to address the problem, which is adversely impacting academic performance, workplace productivity, and mental health of youth as well as adults.

It said research on digital addiction has shown distinct risks and mental health consequences among the youth.

"Social media addiction is strongly associated with anxiety, depression, low self-esteem, and cyberbullying stress, with multiple Indian and global studies confirming its high prevalence among those aged 15-24," the Survey said.

It said compulsive scrolling and social comparison are particularly linked to anxiety and depressive symptoms. The World Health Organisation has included Gaming Disorder as an International Classification of Diseases (ICD).

WHO has defined "Gaming Disorder" as a pattern of gaming behaviour --"digital-gaming" or "video-gaming", characterised by impaired control over gaming, increasing priority given to gaming over other activities to the extent that gaming takes precedence over other interests and daily activities, and continuation or escalation of gaming despite the occurrence of negative consequences.

The Survey said "Gaming Disorder" shows evidence of causing sleep disruption, aggression, social withdrawal, and depression, with adolescent populations especially vulnerable. Online gambling and real money gaming present evidence of harm, including financial stress, depression, anxiety, and suicidal ideation, the Survey said.

"Finally, streaming and short video compulsion carry evidence linking binge-watching and endless video loops to poor sleep hygiene, reduced concentration, and heightened stress. Together, these findings underscore the multifaceted nature of digital addiction and its significant impact on mental health," the Survey added.

Targeted congestion pricing in dense business districts, combined with demand-based parking management, can reduce traffic, speed, and emissions as seen internationally, according to the Economic Survey 2025-26.

The survey highlighted the steps taken by Singapore and London authorities to tackle congestion.

The Economic Survey noted that there are several varying estimates of the loss in productivity across cities, resulting from traffic congestion.

A Centre for Science and Environment (CSE) report on Delhi's congestion troubles stated that an unskilled worker stands to lose between Rs 7,200 and Rs 19,600 per year due to congestion, it said.

Similarly, skilled and highly skilled workers can lose as much as Rs 8,300-23,800 and Rs 9,000-25,900 a year, respectively.

A working paper by the Institute for Social and Economic Change (ISEC) estimated the loss of productive hours due to the late arrivals caused by traffic congestion to be around 7.07 lakh hours in 2018 for Bengaluru city, translating to a monetary cost of around Rs 11.7 billion.

A 2018 report by Uber–BCG estimated that costs associated with traffic congestion in the four metros of Delhi, Mumbai, Bengaluru, and Kolkata were USD 22 billion per year.

"Targeted congestion pricing in dense business districts, combined with demand-based parking management, can reduce traffic, raise speeds, and cut emissions, as seen internationally," the survey opined.

Congestion pricing is a transportation demand-management strategy in which drivers are charged a fee for using roads during peak periods of congestion.

Recent reforms, such as the Chennai Metropolitan Area Parking Policy (2025), whereby private vehicle use is disincentivised, treat parking as valuable real estate, and prioritise walking, cycling, and public transport, show that such demand-management tools are feasible complements to transit investment, it added.

Singapore Electronic Road Pricing (ERP) is a dynamic, electronic, congestion-pricing system that automatically charges vehicles when they pass under a toll gantry during peak periods. It is specifically designed to manage and reduce traffic congestion, and decades of data from Singapore show that it works very effectively, the survey stated.

The London Congestion Charge is a cordon-based, area licensing system where vehicles pay a daily fee to enter, leave, or move within a designated central London zone, it added.

The survey also suggested scaling up city bus fleets, accelerating e-bus adoption and mainstreaming of the last-mile and shared mobility as other elements, which could be used to curtail congestion in cities

India Inc can draw inspiration from the domestic pharma industry, which transformed itself in the aftermath of the TRIPS Agreement in 1995, to deal with an unpredictable global tariff regime, according to the Economic Survey 2025-26.

The pharmaceutical sector, which had expanded under the process-patent regime of the 1970 Patent Act, faced a sudden change in its operating environment when the TRIPS-compliant product-patent regime took effect in 1995.

This shift challenged the very foundation of India's competitive advantage, reverse engineering, and cost-efficient process innovation.

However, the manner in which the sector responded offers a compelling template for industries currently confronting rising external trade barriers, especially tariff escalations in major markets, the Economic Survey stated.

The new regime enabled Indian firms to legally replicate patented drugs by developing alternative production pathways, thereby creating one of the most affordable pharmaceutical ecosystems in the world.

The earliest and most important response to the TRIPS shock was a clear shift toward developing internal capabilities and the Indian pharmaceutical companies moved beyond simple process improvements, the Economic Survey stated.

They began investing heavily in formulation science, transitioning R&D from reverse-engineering existing drugs to creating new chemical entities, cost-efficient Novel Drug Delivery Systems, and complex generics that meet global regulatory standards, it stated.

Industry-wide R&D spending grew from Rs 1,250 million in FY94 to nearly Rs 209.8 billion by FY19, it added.

This expanded scientific and technological foundation fostered innovation-led competitiveness.

By strengthening internal capabilities early on, Indian firms positioned themselves to enter and grow in regulated export markets.

This is a strategic lesson for modern sectors now facing tariff-driven external shocks: competitiveness must be developed before it is demanded, the Survey stated.

"In the current situation of an unpredictable global tariff regime, India Inc can draw inspiration from the pharmaceutical sector to capitalise on this situation to its advantage.

"India Inc must focus on capability building through strong R&D, Market diversification to reduce dependence on a single market and build resilience, and partnership-driven models such as co-development, licensing, and contract manufacturing to help reduce risk," the Economic Survey stated.

Additionally, strategic consolidation is necessary to expand in capital- and compliance-heavy environments, it added.

Elaborating further, the Economic Survey pointed out that the second primary strategic response the pharma industry undertook was "rapid market diversification".

As TRIPS-era constraints narrowed domestic opportunities, Indian pharmaceutical firms pivoted outward, targeting regulated markets such as the US and Europe by filing large-scale Drug Master Files (DMFs) for APIs and Abbreviated New Drug Applications for generics.

India's global share of DMF filings rose sharply from 14.5 per cent in CY 2000 to 48.7 per cent by CY 2007, with 331 active DMF filings by India in 2019.

These filings helped the pharmaceutical industry penetrate these markets despite the restrictions of the TRIPS agreement.

This demonstrated a core structural insight: over-reliance on a single market magnifies vulnerability, while multi-market exposure insulates firms from tariff shocks. Recognising the need for distribution access and regulatory footholds, Indian firms undertook targeted acquisitions abroad.

These moves enabled a local presence in developed markets, improved compliance, and accelerated the adoption of technology.

By the early 2010s, India had become the world's largest supplier of affordable generics, responsible for nearly 20 per cent of global supply, the Economic Survey stated.

Export markets diversified, regulatory credibility deepened, and the innovation pipeline expanded, it added.

"What began as an existential threat evolved into a catalyst for global leadership. This strategic realignment translated into a substantial expansion of India's pharmaceutical exports. Between FY01 and FY25, pharmaceutical exports increased from USD 1.9 billion to USD 30.5 billion in FY25, representing a nearly 16-fold rise driven by market diversification, regulatory alignment, and enhancements in capability," it stated.

From drone-based land surveys in Andhra Pradesh to digital procurement platforms in Madhya Pradesh, state-level innovations are transforming agricultural governance and delivering measurable outcomes, according to the Economic Survey 2025-26.

Several Indian states have undertaken targeted agricultural reforms in recent years, encompassing land governance, markets, water management, technology adoption, and crop diversification. These initiatives have improved farm outcomes, the survey noted.

LAND AND RESOURCE GOVERNANCE

------------------------------------------- Andhra Pradesh implemented the Andhra Pradesh Resurvey Project (2021) using drones, Continuously Operating Reference Station (CORS), and GIS to issue tamper-proof digital land titles. As of 2025, 6,901 villages have been covered, with 81 lakh land parcels resurveyed and approximately 86,000 boundary disputes resolved.

Bihar launched the Mukhyamantri Samekit Chaur Vikas Yojana (2025) to develop chaur lands (wetlands) for aquaculture, bringing over 1,933 hectares under fish-based production across 22 districts.

MARKET REFORMS

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Madhya Pradesh's Souda Patrak initiative (2021) enabled direct MSP-based purchases from farmers through a digital platform, reducing mandi congestion and improving payment transparency. By December 2025, over 1.03 lakh transactions had been facilitated.

Andhra Pradesh's e-Farmarket platform connected farmers and traders via Rythu Bharosa Kendras.

WATER MANAGEMENT

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Assam State Irrigation Plan (2022) aimed to expand irrigation coverage through new schemes and solar pumps, increasing gross irrigated area to 24.28 per cent of agricultural land by 2024–25.

Uttar Pradesh Ground Water Rules (2020) strengthened the regulation of extraction, with groundwater recharge rising marginally by 2025, although extraction intensity also increased.

TECHNOLOGY AND DIGITAL AGRICULTURE

-------------------------------------------------- Karnataka's FRUITS platform (2020) created a unified farmer database supporting DBT, MSP procurement, and crop surveys, covering over 55 lakh farmers and multiple schemes.

Jharkhand launched a GIS-based Climate Smart Agriculture and Agri Stack Scheme (2024) to enable farm-level tracking and climate-informed planning, with outcome indicators still in development.

Bihar's Fourth Agriculture Roadmap (2023–28) builds on earlier roadmaps, which have already led to significant increases in fish and milk production

Raising concerns on the growing consumption of ultra-processed foods containing high fat, salt and sugar amid India becoming one of the fastest growing markets for such items in the world, the Economic Survey has pitched for a ban on their advertisements from morning to late night.

The pre-Budget document tabled in the Lok Sabha on Thursday also suggested restrictions on the marketing of infant and toddler milk and beverages, while flagging growing obesity among children.

"More troubling still, the prevalence of excess weight among children under five has risen from 2.1 per cent in 2015-16 to 3.4 per cent in 2019-21," it said.

According to estimates, over 3.3 crore children in India were obese in 2020, and it is projected to reach 8.3 crore children by 2035.

The 2019-21 National Family Health Survey (NFHS) reports that 24 per cent of Indian women and 23 per cent of Indian men are overweight or obese," it added.

Among women aged 15-49 years, 6.4 per cent are obese, and among men, 4.0 per cent are overweight, the survey said. Suggesting measures to address the challenge of ultra-processed foods (UPF), it called for a "front-of-pack nutrition labelling" of high-fat, sugar and salt (HFSS) food with a warning, restricting marketing to children, and ensuring that trade agreements do not undermine public health policy.

Stating that improving diets cannot depend solely on consumer behaviour change, the survey said it will require coordinated policies across food systems that regulate UPF production, promote healthier and more sustainable diets and marketing.

"The option of a marketing ban on UPFs from 0600 hours to 2300 hours for all media, and enforcing restrictions on the marketing of infant and toddler milk and beverages, could be explored," according to the survey.

Besides traditional media, it has also recommended UPF marketing restrictions to be mandatory and include digital media.

It cited examples of Chile, which has integrated laws, along with Norway and the UK, where advertisement restrictions are in place for UPFs.

"Recently, the UK has banned junk food advertising before 9 pm on TV and online to reduce children's exposure and curb childhood obesity. Further action on other marketing activities, including school and college sponsorship of events by UPF manufacturers, can be designed," it said.

According to the survey, Rule 7 of the Advertisement Code prohibits misleading, unverified, or unhealthy advertisements; it does not define "misleading" with measurable or nutrient-based criteria, leaving interpretation subjective and inconsistent.

Similarly, the Central Consumer Protection Authority (CCPA) Guidelines for Prevention of Misleading Advertisements (2022) mandate that advertisements must not exaggerate health benefits or exploit children.

"...yet they lack clear nutrient thresholds or a framework for identifying misleading claims in food marketing," it said, adding that "this regulatory ambiguity allows companies marketing UPFs to continue making vague 'health', 'energy', or 'nutrition' cues without violating any clearly defined standard, highlighting a critical policy gap that needs reform".

The survey expressed concern that India is one of the fastest-growing markets for UPF sales, which is contributing to chronic diseases worldwide and widening health inequalities.

It also suggested a "multi-pronged approach" for tackling the increase of human intake of UPF -- popularly known as junk foods -- which includes burgers, noodles, pizza, soft drinks, etc., and said it is contributing to chronic diseases worldwide and widening health inequalities.

Sales of UPFs in India grew more than 150 per cent between 2009 and 2023. Retail sales of UPFs in India surged from USD 0.9 billion in 2006 to nearly USD 38 billion in 2019, a 40-fold rise. "It is during the same period that obesity has nearly doubled in both men and women", the survey said

India's public-private partnership (PPP) framework needs to move from transaction-centric execution toward system-level market building, with a sharper focus on reducing structural uncertainty, the Economic Survey 2025-26 suggested on Thursday.

The pre-Budget document tabled in Parliament further said that this requires clearer sectoral pipelines with multi-year visibility, a tighter linkage between national programmes and bankable project preparation, as well as disciplined pre-construction risk closure by the public authority.

The Survey noted that PPP outcomes have been weakest where land acquisition, statutory clearances, demand assessment, or utility shifting have remained unresolved.

In the coming decade, it said a credible PPP regime will be defined less by risk transfer on paper and more by the State's capacity to absorb early-stage risks that private capital cannot efficiently price.

"Accordingly, India's PPP framework needs to move from transaction-centric execution toward system-level market building, with a sharper focus on reducing structural uncertainty," the Survey said.

While PPP frameworks have matured at the central level and in select sectors, the pre-Budget document said challenges persist at the sub-national level.

"The distinction between PPPs and Engineering Procurement and Construction (EPC) contracts-namely that PPPs are partnerships rather than vendor arrangements-is not always fully understood," it said.

The Survey noted that trust deficits and a limited understanding of risk–reward principles continue to constrain the uptake of PPPs in several states andurban local bodies. These challenges are compounded by uneven institutional capacity, even as states and cities account for a rising share of infrastructure demand, it said.

The Survey said the next reform frontier lies in professionalising PPP cells, adopting programmatic approaches instead of project-by-project experimentation, and leveraging data platforms to track performance, renegotiation, and lifecycle outcomes.

Referring to the highways sector, the Survey said to align freight speeds with global benchmarks, the High-Speed Corridor (HSC) network expanded from 550 km in 2014 to 5,364 km by December 2025.

"A total network of approximately 26,000 km is targeted by FY33, with 9,366 km currently under implementation," it said.

Referring to India's Shipping sector, the document noted that India has further strengthened the landlord port model to catalyse private investments in port development and operations.

The landlord port model provides for port authorities to retain ownership of port land and core infrastructure while awarding long-term concessions to private operators for terminal development and operations, with an aim to enhance operational efficiency and modernise infrastructure through private investment.

This strategic shift is evident in the substantial growth of PPP projects. The number of PPP projects awarded rose from 37 in FY15 to 87 in FY25, with the total value of PPP projects increasing from Rs 16,180 crore to Rs 61,029 crore, reflecting a 377 per cent rise," it said.

According to the Survey, currently, 57 operational PPP projects valued at Rs 42,235 crore have increased port capacity by approximately 660 MTPA

India's civil aviation sector is on a sustained growth trajectory, helped by a conducive policy environment, rising demand and steady infrastructure expansion, the Economic Survey said on Thursday.

As the country aims to be a global hub for aviation activities, the Survey said Indian airports can aspire to become global aviation hubs by promoting layovers and enhancing the transit experience for international passengers.

"While the sector remains sensitive to global economic cycles and the need for continuous capacity upgradation, the current passenger volumes represent only a fraction of India's potential," it said.

India is the world's third-largest domestic aviation market and the number of airports increased to 164 last year from 74 in 2014.

In FY25, Indian airports handled 412 million passengers, and the same is projected to increase to 665 million by FY31.

However, the Survey said the country currently operates approximately 0.11 airports per million people, significantly lower than the US (47.35) and China (0.39), signalling substantial headroom for further growth.

"Expansion in India's airport and air navigation infrastructure and a growing ancillary ecosystem, including Maintenance, Repair, and Overhaul (MRO) and leasing, are strengthening the sector.

"These developments, along with technology integration, positions civil aviation as a key driver of nationwide economic connectivity and integration," the Survey said.

On Wednesday, Prime Minister Narendra Modi highlighted the growth potential and policy stability as he wooed investors, saying that there are immense opportunities in aircraft manufacturing, pilot training, advanced air mobility and aircraft leasing areas in the country.

Modi, in a special message at an aviation summit, had also said the government is working on all necessary regulatory reforms to make cargo movement faster and more efficient.

Meanwhile, the Survey said that aviation services have continued to play a key role in sustaining passenger mobility and air cargo flows.

In FY25, overall air passenger traffic increased by 9.4 per cent to 411.8 million passengers.

"However, a softening of momentum was observed during April-November 2025, when overall passenger traffic increased by 3.5 per cent (YoY), reflecting flight disruptions and short-term demand adjustments in the domestic passenger segment," it noted.

According to the Survey, air cargo volume grew from 2.53 million metric tonnes (MMT) in FY15 to 3.72 MMT in FY25, and 2.95 MMT handled in FY26 (until December), driven by several key policy initiatives and reforms.

The Economic Survey on Thursday called for a multi-pronged strategy to strengthen the country's investment climate by addressing both structural and cyclical factors, noting that the key challenge going forward is sustaining FDI inflows amid heightened global volatility.

It said that the window for action is still open, but it will not remain so indefinitely.

There is a need to move decisively to transform the FDI challenge into the next chapter of the economic growth story, it said.

Despite a clear government intent and proven economic management, FDI inflows remain below their potential, especially for infrastructure needs.

"Proactive reforms are essential to attract more foreign investment," it said adding this approach involves developing a targeted strategy that identifies a specific set of GVC (global value chain) anchors and establishes a state apparatus that collaborates directly with them as partners.

The direct engagement will help resolve cross-agency issues and provide customised and time-bound solutions.

Additionally, it is also crucial for India not only to offer compelling incentives but also to ensure these incentives are reliably implemented, it said.

"Establishing a single, empowered centre of accountability will position India as a credible alternative production hub capable of handling large volumes, integrating with global suppliers, meeting regulatory and compliance standards, and, importantly, providing predictability over a multi-year timeframe," it said.

Creating a task force to engage top global companies and promote India's advantages - stability, macroeconomic strength, sustained growth and market size - could boost FDI, especially in targeted sectors.

It said proactive diplomacy, highlighting these strengths, can help offset tariff challenges.

It added that India's task to attract FDI (foreign direct investment) is more complex then countries like Vietnam and Malaysia, as it is competing with emerging FDI destinations, which have already been wooing investors with interventions at the prime minister level.

The survey suggested integration of efforts and robust centre-state coordination as it would make large investors believe in the country's intention to host them.

Further, a strategic approach to identifying priority sectors, along with a mix of incentives and reforms, will help prevent the dilution of policy efforts and improve overall effectiveness, it added.

"Going forward, the challenge is to sustain FDI inflows in an environment of heightened global volatility, which underscores the need for a multi-pronged strategy that strengthens the investment climate by addressing both structural and cyclical factors that determine capital flows," the Survey said.

Companies harvest profits from established operations in India while hesitating to commit fresh capital amid global uncertainty.

"The solution lies in mobilising new investment through policy stability, aggressive investor engagement, and scaling proven state-level models nationwide," it said.

It also noted that political stability and strong macroeconomic fundamentals are key drivers of FDI and India excels in this area but there is a need to better leverage its strengths.

Further it said as foreign investors prioritise predictability and sustainability in policies, every policy change in the country must pass the necessity test to meet both these parameters.

According to RBI data, in FY25, gross FDI inflows into India stood at USD 81 billion, representing a 13 per cent increase from USD 71.3 billion in FY24.

It said the momentum created by improvements in the investment climate, streamlined regulations, and reduced bureaucratic procedures, thereby enhancing the ease of doing business, must be sustained and accelerated.

"India's credit rating upgrades can be leveraged for additional momentum, as foreign investment and sovereign ratings demonstrate a strong historical correlation globally," it said adding the country's continued economic resilience, steadfast commitment to fiscal consolidation, and reform trajectory position it well for unlocking investor interest.

Further the survey said while it is essential to recognise the role of trade and investment agreements as enablers, there is a pressing need for action across departments and agencies to streamline India's trade policy and secure a greater role in GVCs.

India's ethanol-blended fuel programme, a cornerstone of its energy security strategy, has saved the country more than Rs 1.44 lakh crore in foreign exchange and replaced about 245 lakh metric tonnes of crude oil as of August 2025, according to the Economic Survey.

But the rapid expansion is creating unintended consequences, the Survey warned.

Government pricing policies that favour maize-based ethanol are driving farmers to shift away from pulses and oilseeds, raising concerns about long-term food security and nutrition.

The ethanol programme has expanded beyond traditional sugar-based feedstock to include food grains, particularly maize, as India works toward its E20 blending target -- mixing 20 per cent ethanol with petrol.

MAIZE BOOM, PULSES DOWN

Maize yields have jumped 48 per cent since FY16, reaching 3.78 tonnes per hectare by FY25, while yields for soybeans, sunflower, rapeseed, peanuts and millet have stagnated or declined, the Survey said.

The government sets annual ethanol prices by feedstock type, with assured purchases by state oil companies. Between FY22 and FY25, maize-based ethanol prices rose at 11.7 per cent annually -- faster than rice or molasses-based ethanol.

The pricing signal worked. Maize production and cultivated area grew at 8.77 per cent and 6.68 per cent annually over the same period.

But pulses saw output and acreage decline, while oilseeds and other cereals posted modest growth of 1.7 per cent and 2.9 per cent, respectively.

In Maharashtra and Karnataka, maize now competes directly with pulses, oilseeds, soybean, millets and cotton for land and resources.

The hoped-for shift from water-intensive paddy rice to maize has not materialised, the Survey noted.

FOOD VS FUEL

Pulses and oilseeds are critical to Indian diets and nutrition, but are sliding down farmers' priority lists. The shift risks deepening India's dependence on edible oil imports and exposing food prices to greater volatility, the Survey warned.

The tension highlights competing goals of "Aatmanirbharta" -- self-reliance -- in energy versus food.

The Survey cited international experience as a cautionary tale. OECD-FAO analyses show biofuel mandates and feedstock-specific pricing can permanently alter crop patterns and food prices when not regularly adjusted. Mature biofuel programmes have increasingly adopted caps, adjustment mechanisms or shifted to second-generation biofuels that don't compete with food crops.

"The Indian experience now displays similar early warning signals," the Survey said.

As the programme matures, the Survey called for a comprehensive strategy balancing energy and food security -- potentially including boosting pulse and oilseed yields, avoiding market distortions favouring specific feedstocks, and aligning ethanol feedstock growth with regional resources.

The goal is to preserve ethanol expansion's economic benefits without undermining food security or nutrition.

The value of the rupee, which has slipped to the 92 per dollar mark, does not accurately reflect India's stellar economic fundamentals, the Economic Survey said on Thursday.

"In other words, the rupee, therefore, is punching below its weight," it said, adding investor reluctance to commit funds to India warrants examination at a time when inflation is under control and growth outlook is favourable.

India depends on foreign capital flows to maintain a healthy balance of payments.

"The Indian rupee underperformed in 2025. India runs a trade deficit in goods. Its net trade surplus in services and remittances is not enough to offset it... When they run drier, rupee stability becomes a casualty," said the pre-Budget document tabled in Parliament by Finance Minister Nirmala Sitharaman.

The rupee hit an all-time low of 92.00 against the American currency in early trade on Thursday, weighed down by steady dollar demand and a cautious global mood.

On Wednesday, the rupee settled 31 paise down, revisiting its lowest-ever closing level of 91.99 against the greenback. On January 23, the rupee hit an all-time intraday low of 92 against the US dollar.

The Survey observed that the growth is good; outlook remains favourable; inflation is contained; rainfall and agricultural prospects are supportive; external liabilities are low; banks are healthy; liquidity conditions are comfortable; credit growth is respectable; corporate balance sheets are strong; and the overall flow of funds to the commercial sector is robust.

"Policy dynamism and purposeful governance reinforce this backdrop," said the document authored by a team led by CEA V Anantha Nageswaran.

The rupee's valuation does not accurately reflect India's stellar economic fundamentals, it said.

"Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now.

"However, it does cause investors to pause," the survey said.

It has cited Australia-based Lowy Institute's Power Gap Index, which suggests that India is operating below its full strategic potential. India's power gap score is – 4.0, the lowest in Asia, excluding Russia and North Korea. India has its work cut out.

The Survey further said India is a country of 145 crore people aspiring to become a richer country within a generation, within a democratic framework. India's size and democracy preclude the possibility of templates to emulate.

"With the global dominant power rethinking its economic and other commitments and priorities, throwing global trade into a welter of uncertainty and global frictions mounting and faultlines widening, India's economic ambitions are confronting powerful global headwinds," it said.

Those same forces can be turned into tailwinds if the State, the private sector, and households are willing to align, adapt, and commit to the scale of effort that the moment demands. The task will be neither simple nor comfortable -- but it is unavoidable, the 687-page document said.

The Economic Survey on Thursday said growth patterns that rely disproportionately on domestic demand and credit-enabled consumption, without commensurate productivity and export gains, may raise near-term activity but do not materially strengthen surplus formation.

"In a structurally savings-short setting, this configuration tends to sustain a weaker currency and rollover risk premium in domestic capital costs," the pre-Budget document said as it made a strong case for reducing capital cost.

It also highlighted that reducing India's cost of capital requires attention not only on financial intermediation but also on the drivers of production, exports, and surplus.

Emphasising the importance of financial sector reforms, the Survey called for deeper bond markets, broader institutional participation, credible benchmarks and improved risk pricing.

Such elements will help reduce intermediation costs and improve capital allocation.

However, the Survey also mentioned that these reforms are most effective in environments where domestic savings are increasing and the external position is improving.

"Greater reliance on foreign capital can bridge temporary gaps but, when persistent, tends to elevate risk premia and narrow policy space-outcomes that are already reflected in the pricing of capital in CAD economies," it noted.

In the first half of the current financial year, the current account deficit (CAD) was moderate at 0.8 per cent of GDP.

"The durable route to a lower cost of capital is therefore inseparable from a growth pattern anchored in higher productivity, enhanced manufacturing competitiveness, sustained export growth, and the gradual transition from structural savings deficit to structural savings strength," the pre-Budget document said, stressing that financial deepening can support the transition but cannot substitute for it.

Among other aspects, the Survey said rigidities in labour regulation and firm-scale dynamics have historically constrained capital deepening, learning by doing, and the movement of firms up the productivity ladder.

"... growth patterns that rely disproportionately on domestic demand and credit-enabled consumption, without commensurate productivity and export gains, may raise near-term activity but do not materially strengthen surplus formation.

"In a structurally savings-short setting, this configuration tends to sustain a weaker currency and rollover risk premium in domestic capital costs," it said.

In a world of geopolitical turbulence, India must run a 'marathon and sprint' simultaneously, or run a marathon as if it were a sprint, the Economic Survey 2025-26 said on Thursday.

The pre-Budget document tabled in parliament further said that the global environment is being reshaped by geopolitical realignments that will influence investment, supply chains and growth prospects for years to come.

"Against today's global churn, India must choose to build resilience, innovate relentlessly, and stay the course toward Viksit Bharat, rather than seek quick fixes to visible, short-term pressures," it said.

The Survey said 2026 may mark the point at which policy credibility, predictability and administrative discipline cease to be mere virtues and instead become strategic assets in their own right, with lasting relevance.

"Put differently, India must run a marathon and sprint simultaneously, or run a marathon as if it were a sprint," the document said.

According to the Survey, the appropriate stance for 2026 is therefore one of strategic sobriety rather than defensive pessimism.

"The external environment will require India to prioritise both domestic growth maximisation and shock absorption, with a greater emphasis on buffers, redundancy, and liquidity," it said In a world of geopolitical turbulence, the Survey said, this may not be confined to a year but could be a more enduring feature.

"In response, India 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," it said, adding that this has been the historical global experience.

The Survey pointed out that India is relatively better off than most other countries due to its strong macroeconomic fundamentals, but this does not guarantee insulation.

While noting that the country benefits from a large domestic market, a less financialised growth model, strong foreign exchange reserves and a credible degree of strategic autonomy, it said these features provide buffers in an environment where financial volatility is imminent, and geopolitical uncertainty is permanent.

The Survey observed that the paradox of 2025 is that India's strongest macroeconomic performance in decades has collided with a global system that no longer rewards macroeconomic success with currency stability, capital inflows, or strategic insulation.

On global trade tensions, the Survey said, although the President of the United States announced reciprocal tariffs of 25 per cent on India in April, India was expected to strike an early agreement with the US administration and lower them.

So, it said in August, when the American President announced an additional penal tariff of 25 per cent on most of India's merchandise exports to the United States on top of the reciprocal tariff of 25 per cent announced in April, it surprised many since India was expected to be one of the early winners in the new tariff regime of the United States.

"Growth forecasts were revised downward. But in reality, growth accelerated due to a slew of structural reforms and policy measures," the Survey said.

Taking cognisance of the rise in digital addiction, the Economic Survey 2025-26 called for comprehensive interventions to address the problem, which is adversely impacting academic performance, workplace productivity, and mental health of youth as well as adults.

The Survey report tabled in Parliament on Thursday identified digital addiction as a rising problem impacting mental health of youth and adults, and discussed measures taken by various countries, including Australia, China, South Korea and called for several interventions besides ongoing efforts of various government departments.

It said digital addiction among youth has become a significant public health concern worldwide, prompting regulatory, therapeutic, and educational responses from governments, health institutions, and civil society.

"With near-universal mobile/internet use among 15-29-year-olds, access is no longer the binding constraint; the focus needs to shift to behavioural health considerations such as the rising problems of digital addiction, quality of content, wellbeing impacts, and digital hygiene," the Survey said.

Several countries such as Australia, China, South Korea, Brazil, France, Spain, Finland, Japan, and states in the US, have taken stringent measures to check the problem of digital addiction.

"A major challenge in addressing digital addiction in India is the lack of comprehensive national data on its prevalence and mental health effects. This hinders targeted intervention, resource allocation, and integration of digital wellness into national mental health strategies," the Survey said.

It said the upcoming Second National Mental Health Survey (NMHS), led by NIMHANS and commissioned by the Health and Family Welfare ministry is expected to generate empirical and actionable insights into the prevalence of mental health issues in the Indian context.

"Developing a comprehensive set of indicators is essential to assessing the multi-dimensional effects of digital addiction interventions," the Survey said.

It said key metrics to compile data may include usage patterns (average recreational screen time), health outcomes (sleep quality anxiety and stress levels), academic and workplace performance (attendance and task completion), and safety concerns such as cyberbullying, online scams, and exposure to real-money gaming.

The Survey said while digital access fuels learning, jobs, and civic participation, compulsive and high-intensity use can impose real economic and social costs, ranging from lost study hours and reduced productivity to healthcare burdens and financial losses resulting from risky online behaviours.

It said research on digital addiction has shown distinct risks and mental health consequences among the youth.

"Social media addiction is strongly associated with anxiety, depression, low self-esteem, and cyberbullying stress, with multiple Indian and global studies confirming its high prevalence among those aged 15-24," the Survey said.

It said compulsive scrolling and social comparison are particularly linked to anxiety and depressive symptoms. The World Health Organisation has included Gaming Disorder as an International Classification of Diseases (ICD).

WHO has defined "Gaming Disorder" as a a pattern of gaming behaviour --"digital-gaming" or "video-gaming", characterised by impaired control over gaming, increasing priority given to gaming over other activities to the extent that gaming takes precedence over other interests and daily activities, and continuation or escalation of gaming despite the occurrence of negative consequences.

The Survey said "Gaming Disorder" shows evidence of causing sleep disruption, aggression, social withdrawal, and depression, with adolescent populations especially vulnerable. Online gambling and real money gaming present evidence of harm, including financial stress, depression, anxiety, and suicidal ideation, the Survey said.

"Finally, streaming and short video compulsion carry evidence linking binge-watching and endless video loops to poor sleep hygiene, reduced concentration, and heightened stress. Together, these findings underscore the multifaceted nature of digital addiction and its significant impact on mental health," the Survey added.

The country's primary capital markets delivered a robust performance in FY26, emerging as a global leader in initial public offerings (IPOs) despite an uncertain environment, the Economic Survey said on Thursday.

Supported by sound macroeconomic fundamentals, strong domestic investor participation and continued regulatory reforms by Sebi, the markets remained resilient even as trade disruptions, volatile capital flows and uneven corporate earnings weighed on sentiment worldwide, it added.

While FY26 so far has been eventful for global economies and financial markets, "India's equity markets exhibited a phase of measured yet resilient performance, reflecting the interplay of supportive policies, macroeconomic conditions and sustained domestic investor participation," the Survey noted.

Market sentiment was weighed down by the imposition of US tariff measures, weaker-than-expected corporate earnings in the first quarter of FY26 and foreign capital outflows. However, a combination of supportive measures including personal income tax cuts, GST reforms, easing of monetary policy, receding inflation and improved corporate performance in the second quarter helped stabilise markets.

During April-December 2025, the Nifty 50 and BSE Sensex gained about 11.1 per cent and 10.1 per cent, respectively, marking a phase of correction and consolidation following the sharp rally in the previous fiscal.

The Survey noted that the primary markets continued to attract strong domestic and overseas investor interest, reinforcing the country's role as a key driver of global capital formation. Total resource mobilisation through primary markets, involving both debt and equity, stood at Rs 10.7 lakh crore during FY26 (till December 2025).

IPO volumes during the period were 20 per cent higher than FY25, while the amount raised rose 10 per cent year-on-year. Mainboard listings increased to 94 from 69 a year earlier, with funds raised climbing to Rs 1.60 lakh crore from Rs 1.46 lakh crore.

A notable feature of FY26 IPO activity was the dominance of Offer for Sale (OFS) components, which accounted for 58 per cent of total proceeds, indicating higher stake sales by existing shareholders.

Apart from mainboard listing, the small and medium enterprises (SME) segment also remained buoyant, with 217 SME listings during FY26 (till December 2025), up from 190 a year ago. Funds mobilised through SME IPOs rose to Rs 9,635 crore from Rs 7,453 crore.

The Survey highlighted that as market activity expands and new instruments and intermediaries emerge, the quality of regulatory governance becomes critical to maintaining market integrity. In this context, the Securities Markets Code, 2025, introduced in the Lok Sabha in December 2025, marks a significant step towards consolidating India's securities laws.

The Code replaces the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Depositories Act, 1996, and covers areas such as board independence, conflict management, transparency, investor protection, regulatory sandboxing, governance of market infrastructure institutions and ease of doing business.

The Survey also pointed to a structural shift in household financial savings towards market-linked instruments, particularly equities. During FY26 (till December 2025), 235 lakh demat accounts were added, taking the total beyond 21.6 crore. Unique investors crossed the 12-crore mark in September 2025, with nearly a quarter being women.

The mutual fund industry also expanded steadily, with 5.9 crore unique investors as of December 2025, a majority of them from non-tier-I and tier-II cities, underscoring the widening and deepening of financial participation across the country.

The share of equity and mutual funds in annual household financial savings increased from 2 per cent in FY12 to over 15.2 per cent in FY25, the Survey said adding that the move coincided with a steady rise in SIP (Systematic Investment Plans) contributions.

Material intensity and energy storage requirements have emerged as two major roadblocks to the greater utilisation of clean energy sources as India moves ahead with its Nationally Determined Contribution (NDC) targets, the Economic Survey has said.

The Economic Survey for 2025–26 was tabled in Parliament on Thursday.

India is adopting a multi-faceted approach to mitigate global warming by diversifying its energy sources and enhancing access, while increasing the share of non-fossil fuels, improving energy efficiency and promoting stability across its energy systems.

These strategies are aligned with the country's development and sustainability objectives, and a comprehensive set of policies has been implemented to achieve the 2030 NDC targets.

The energy transition is being pursued through initiatives across sectors such as nuclear, solar and wind energy, green hydrogen, battery storage and critical minerals, addressing energy security and transition imperatives simultaneously. However, despite progress in expanding non-fossil fuel energy, challenges remain, the Survey noted.

Renewable energy systems such as solar and wind are highly material-intensive and require capital-intensive energy storage technologies for integration into the power grid, it said, adding that material and storage requirements represent the two key constraints to wider adoption.

The material challenge extends beyond access to critical minerals and has implications for mining and energy requirements for material processing.

The survey also said that to sustain India's renewable energy momentum, challenges such as high capital costs, land acquisition delays, and grid availability need to be addressed through appropriate instruments including innovative financing mechanisms and optimised project execution.

Further, large-scale integration of Battery Energy Storage Systems (BESS) and Pumped Storage Hydropower (PSP) can address the inherent variability of renewables, ensure grid stability and peak-load management, and enable reliable, large-scale adoption of renewables to support the transition to a clean, secure, and resilient power system.

On energy technology, the Survey said the challenge is not limited to the development of new technologies but also involves substantial investment needs. The unit cost of installed storage capacity depends on the number of times each megawatt of storage is used annually, which is likely to be lower for short-term storage capacities than for long-term ones.

The Central Electricity Authority has estimated that India will require about 336 gigawatt-hours of energy storage capacity by 2029–30 and 411 GWh by 2031–32 to support reliable integration of renewable energy sources. To enable this scale-up, a coordinated set of policy, regulatory, demand-side and supply-side measures is being implemented.

The Survey observed that metals such as lithium, cobalt, nickel, copper and rare earth elements have emerged as strategic chokepoints in shaping a low-carbon economy, influencing energy security, industrial competitiveness and geopolitical power, as reflected in trade restrictions imposed by source countries on exports of critical minerals.

The document noted that India has already surpassed the target of 50 per cent installed power capacity from non-fossil fuel sources, which stood at 51.93 per cent at the end of December 2025, supported by record annual additions of renewable energy capacity.

During 2025-26, up to December 31, a total of 38.61 GW of renewable energy capacity was installed, including 30.16 GW of solar, 4.47 GW of wind, 0.03 GW of bio-power and 3.24 GW of hydro power.

According to the International Renewable Energy Agency's Renewable Energy Statistics 2025, India now ranks fourth globally in total installed renewable energy capacity, after China, the United States and Brazil, underscoring its growing influence in global clean energy markets.

The Economic Survey 2025-26 called for a "modest increase" in the retail price of urea -- unchanged since March 2018 at Rs 242 per 45-kg bag -- while transferring an equivalent amount directly to cultivators on a per-acre basis.

The proposed shift from input subsidy to income support aims to correct a three-decade-old imbalance in fertiliser use that is degrading soil quality and undermining crop yields, the document, tabled in Parliament on Thursday, stated.

The Survey flagged that the nitrogen-phosphorus-potassium (N:P:K) ratio used by Indian farmers has deteriorated sharply from 4:3.2:1 in 2009-10 to 10.9:4.1:1 in 2023-24, driven by excessive nitrogen application through subsidised urea. Agronomic benchmarks suggest a ratio closer to 4:2:1 for most crops and soil types.

"A more durable correction requires re-anchoring fertiliser decisions in soil and crop requirements rather than in administered price distortions," the Survey said, proposing to separate farmer income support from fertiliser purchase by allowing nutrient prices to reflect agronomic scarcity.

SOIL DEGRADATION

-------------------------

The Survey documented how excess nitrogen reduces soil organic matter, accelerates micronutrient depletion, weakens soil structure and increases nitrate leaching into groundwater. In several irrigated belts, yield response to fertiliser has plateaued or declined even as application rates have risen-reflecting not under-use of inputs but their misallocation across nutrients.

"Over time, crops require progressively larger quantities of fertiliser to maintain yields, raising input intensity without commensurate output gains," it said.

While India has undertaken measures like nutrient-based pricing, neem-coating of urea and Aadhaar-linked point-of-sale verification, these operate largely on the supply side without altering the core economic signal farmers face when choosing nutrients.

ZONE-SPECIFIC TRANSFERS

-------------------------------------

Under the proposed approach, farmers would receive the same overall purchasing power but nitrogen's relative price would move closer to its agronomic cost. Those applying nitrogen efficiently would gain by receiving the full transfer while spending less at retail counters. Over-users would face clear incentives to shift towards balanced fertilisation, soil testing, nano-urea and organic amendments.

The Survey recommended indexing transfers to agro-climatic zones and cropping patterns, recognising that rice-wheat belts and sugarcane tracts legitimately use more nitrogen than rain-fed coarse cereals or pulses. Zone- and crop-specific benchmarks would ensure structural differences in agronomic demand are recognised while rewarding efficiency within each category.

India's digital agriculture infrastructure -Aadhaar-linked fertiliser sales, real-time tracking through the Integrated Fertiliser Management System, and the PM-Kisan platform - makes such a reform operationally feasible, the Survey said.

PHASED ROLLOUT

-------------------------

It proposed piloting the approach across agro-climatic regions covering irrigated, rain-fed and mixed systems to calibrate crop- and zone-specific benchmarks before national expansion. One design issue flagged was tenancy, where transfers may accrue to landowners while renters cultivate the land.

"The objective is not to compress fertiliser use but to re-align it with crop physiology and soil biology," the Survey said, adding that corrected nutrient ratios would raise yield response and reduce total fertiliser required per tonne of grain over time.

The government is well on track to meet the fiscal deficit target of 4.4 per cent of GDP estimated for the current financial year based on broad trends, the Economic Survey 2025-26 tabled in Parliament on Thursday said.

According to the survey prepared by Chief Economic Advisor V Anantha Nageswaran and team, the central government's fiscal trajectory stands out for combining consolidation with sustained public investment, earning three sovereign rating upgrades this year.

Between FY20 and FY25 (Provisional Actual), the share of capital spending in the total central government expenditure increased from about 12.5 per cent to 22.6 per cent, while effective capex as a share of GDP rose from roughly 2.6 per cent to 4 per cent, the survey said.

Even as states are overshooting their revenue deficit, the central government, through its Special Assistance to States for Capital Expenditure/Investment (SASCI), has successfully incentivised states to maintain capital expenditure at around 2.4 per cent of GDP, it said, adding the expansion of unconditional cash transfers across several states has contributed to rising revenue expenditure, with implications for fiscal space and public investment at the state level.

"Based on the broad trends observed during the year, the central government remains well on track to achieve its envisaged fiscal consolidation path, aiming to attain a fiscal deficit target of 4.4 per cent of GDP in FY26," it said.

As of November 2025, the Union government's fiscal deficit stood at 62.3 per cent of the Budget Estimates, it said.

Observing that markets have acknowledged and rewarded the government's commitment to fiscal discipline through lower sovereign bond yields, with the spread over US bonds declining by more than half, the survey said that, alongside a lower repo rate, these declining yields, which serve as benchmarks for borrowing costs across the economy, will themselves act as a fiscal stimulus.

Credit ratings agency S&P Ratings has acknowledged the credibility of and the commitment to the fiscal glide path, while upgrading India's rating from 'BBB-' to 'BBB', it pointed out.

CareEdge Global, in initiating its coverage of India, also assigned a 'BBB+' rating, underscoring its robust economic performance and fiscal discipline, it added.

It is to be noted that the government overachieved its fiscal deficit target of 4.8 per cent against 4.9 per cent of GDP pegged for FY25.

The fiscal deficit declined from a high of 9.2 per cent of GDP in FY21 to 4.8 per cent of GDP in FY25 and is budgeted at 4.4 per cent of GDP in FY26.

Over the same period, the survey said, the revenue deficit as a proportion of GDP has narrowed steadily, reaching its lowest level since FY09, thereby leaving a greater allocation for capex and reflecting a sustained improvement in the quality of expenditure.

The government should encourage voluntary crop diversification rather than altering minimum support prices (MSP) or weakening procurement, according to the Economic Survey.

The survey noted that India remains structurally dependent on imports of edible oils, pulses and some feedstocks, creating an opportunity to better align farm support with changing consumption patterns, environmental sustainability and national self-reliance while preserving the food security architecture.

"Rather than altering MSP or weakening procurement, a calibrated strategy may use savings from improved stock management to support voluntary crop diversification," the Survey said on Thursday.

Farmers can be offered financially attractive alternatives to rice and wheat acreage, particularly in regions where procurement volumes are high but farm profitability remains modest and agro-ecological conditions favour other crops.

The initial phase can focus on the eastern and central regions, where rainfall patterns, soil conditions, and market access make pulses, oilseeds, and maize economically viable. Regions critical for national food security can be incorporated later, once the approach has been tested.

LINKING AGRONOMY AND MARKETS

------------------------------------------- Crop choices would be guided by agro-climatic suitability and market demand. In eastern India, maize, pulses, and oilseeds fit existing cropping systems. In central regions, oilseeds such as gram and soybeans suit prevailing rainfall and soil conditions.

These crops support national priorities: edible oils and pulses reduce import dependence, while maize and oilseeds contribute to ethanol, livestock, and bioenergy value chains.

INCOME PROTECTION

--------------------------

Per-quintal or per-acre incentives can offset yield differences and transitional costs. Experience from several states shows that modest bonuses can make alternative crops financially attractive, particularly when combined with lower input costs for water, fertiliser and energy.

"These incentives can be financed from fiscal savings created by reducing excess stocks and carrying costs, making the approach fiscally neutral while remaining farmer-centric," the survey said.

CENTRE-STATE PARTNERSHIP

-----------------------------------

State-level diversification missions would be implemented through the Centre-State partnership.

The Centre's contribution would come from procurement, storage, and interest savings, while states would fund their share from reduced input subsidies and existing incentive frameworks. Transitional financing could be provided, conditional on verified acreage shifts.

MARKET DEVELOPMENT

----------------------------

Over time, public intervention can evolve from physical procurement towards enabling markets for a wider range of crops. The government can increasingly rely on price-deficiency payments, bonuses and assured offtake mechanisms to stabilise farmer incomes while encouraging private investment.

Fiscal savings should be reinvested in post-harvest infrastructure -- oilseed processing, pulse milling, maize drying and ethanol linkages -- leveraging public-private partnerships and the Agri-Infrastructure Fund.

SAFEGUARDS

----------------

Food security remains protected through automatic adjustments in procurement volumes and buffer norms. WTO compatibility can be maintained by structuring diversification support as area-based, decoupled payments linked to sustainability goals.

"Utilising efficiencies in the existing procurement system to finance voluntary, agronomy-led diversification provides a practical pathway to increase farmer incomes, alleviate fiscal pressures, and enhance long-term food and nutritional security," the Survey said.

The global energy transition is no longer driven just by technology but increasingly limited by control over critical minerals, with metals like copper and rare earth elements emerging as "strategic chokepoints" that shape low-carbon economies, energy security and geopolitical influence amid export curbs by key supplier nations, the Economic Survey said on Thursday.

Copper prices have turned highly volatile due to mine disruptions in Indonesia, Congo and Chile, fuelling fears of medium- to long-term supply shortfalls against surging demand from power grids and data centres worldwide, compounded by protectionist trade barriers, the Economic Survey 2025-26 said.

"Metals like lithium, cobalt, nickel, copper, and rare earth elements have become the new strategic chokepoints in shaping the contours of a low-carbon economy, influencing energy security, industrial competitiveness, and geopolitical power, as observed through several trade restrictions on export of critical minerals by source countries," it said.

As demand accelerates, advanced economies are responding by promoting standards-based critical mineral markets, emphasising sustainability, traceability, and governance. Initiatives such as the G7 Roadmap to Promote Standards-Based Markets for Critical Minerals aim to enhance transparency, reduce concentration risks, andencourage responsible sourcing.

However, implementing digital traceability systems, meeting certification requirements, and enhancing environment, social and governance (ESG) compliance can entail substantial costs.

While these objectives are legitimate, standards are not neutral technical tools. They are instruments of market power. Their design will determine who can enter supply chains, who captures value, and who bearstransition costs.

From the perspective of developing countries, the current direction presents three significant challenges.

Firstly, there's a risk that standards could turn into barriers instead of facilitating progress. With the introduction of digital traceability systems, certification requirements, and ESG compliance, the upfront costs and ongoing expenses can be quite steep.

For many resource-rich developing nations, these financial burdens may lead to investor pessimism, and slow down project development, and limit supply. This is especially concerning as the world urgently needs these countries to ramp uptheir efforts in response to global transitions.

Second, there is a real concern that standards, if narrowly defined or asymmetrically enforced, can trap developing countries in the lowest-value segments of supply chains, exporting raw materials while concentrating value-added processing and manufacturing in advanced economies.

Third, affordability is adversely impacted. Sustainability premiums that tend to raise mineral prices without parallel support for finance, technology, and capacity building will increase costs to transitioning globally and disproportionately impact emerging economies.

A transition that is clean but unaffordable is neither rapid nor just. A durable global framework for critical minerals must therefore move beyond compliance-centric thinking. It must be inclusive, capacity-sensitive, and development-oriented.

Resource-rich regions in Africa, Latin America, and Asia must be treated as co-producers of value, rather than merely sources of raw materials. This requires careful deliberation on aspects of international cooperation on technology transfer, skills, institutions, and investment in mining, processing, and recycling.

India's strategy reflects this balance with a focus on domestic capabilities through the National Critical Mineral Mission along with suitable incentive mechanism, while engaging in international partnerships like the Minerals Security Partnership and theIndo-Pacific Economic Framework. India consistently demonstrates that there is a complementarity between strategic autonomy and global integration.

India's relatively late entry into AI offers an "underappreciated advantage", allowing it to avoid energy-intensive and financially-risky models adopted by other early mover nations, and instead pursue more resource-efficient and inclusive AI path aligned with the country's public objectives, the Economic Survey said on Thursday.

The Survey dedicated a full chapter to 'Evolution of the AI Ecosystem in India', the sharp spotlight on the topic itself signalling the importance of the transformational technology for India and its policymakers.

It asserted that questions of accountability and safety cannot be deferred, as it declared that regulation, data governance and safety will have to evolve in parallel with deployment, not in its aftermath.

The chapter examines how AI is reshaping the global economy and outlined a pragmatic strategy for India, amid "rapid technological change and persistent uncertainty".

"India's position as a relatively late mover in the AI transition also confers an underappreciated advantage. Early adopters who scaled AI under conditions of a regulatory vacuum and cheap capital have now locked themselves into circumstances that are very difficult to back away from. This includes a commitment to energy-intensive architectures that are detrimental to the environment and mounting financial commitments with unclear revenue pathways," the document said asserting India, on the other hand, has the benefit of hindsight.

India can, hence, avoid dependencies that are difficult to unwind.

"This allows India to design AI systems that are more resource-efficient and aligned with public objectives from the outset, sequencing regulation alongside deployment. In this sense, late adoption need not imply lagging ambition. Properly leveraged, it offers the country the opportunity to pursue a more resilient and inclusive AI trajectory," the survey said.

For India, it said, Artificial Intelligence does not pose a one policy question, but rather a series of choices that must be made under conditions of heightened uncertainty and resource constraints.

The Economic Survey 2025-26 argued that the central challenge for India is in what it builds domestically, what it sources globally, what it regulates early, and what it deliberately allows to evolve.

"The contours of the global AI ecosystem make clear that passive consumption is the riskiest position of all," it emphasised.

India's comparative advantage in the AI era does not lie in replicating frontier-scale model development, though valuable process knowledge can be gained from the current efforts already underway.

"The country's strengths lie in application-led innovation, the productive use of domestic data, human capital depth, and the ability of public institutions to coordinate distributed efforts. A bottom-up strategy anchored in open and interoperable systems, sector-specific models, and shared physical and digital infrastructure offers a more credible pathway to value creation than a narrow pursuit of scale for its own sake," the Survey mooted.

That said, openness without careful management of AI development and usage is insufficient.

"As AI capabilities diffuse into critical sectors, questions of accountability and safety cannot be deferred. Regulation, data governance and safety will have to evolve in parallel with deployment, not in its aftermath," it said.

The choices made over the coming few years will determine whether AI deepens existing structural divides or becomes a tool for broad-based productivity and dignified work.

India's task is to ensure that AI development remains aligned with its developmental priorities and its long-term ambition to achieve economic resilience. The opportunity is substantial, but conditional, it said adding, a deliberate and coordinated policy, accompanied by a willingness to act, is required before path dependence sets in.

Stating that about 40 per cent of gig workers in India earn below Rs 15,000 per month, the Economic Survey 2025-26 called for significant policy interventions in the gig economy, suggesting the setting of "minimum per-hour or per-task earnings", which includes compensation for waiting time, to ensure fair wages and reduce the cost disparity between regular and gig employment.

Tabled in Parliament on Thursday, the Survey said the aim of the gig-economy policy should be to reshape terms, allowing workers to exercise genuine choice instead of being forced into gigs by weak demand, skill mismatches, or the lack of a safety net.

The gig economy continues to expand rapidly, yet income volatility remains a key issue, creating obstacles to credit access. Financial inclusion for gig workers also trails behind; they face limited 'thin-file' credit options, which continue to raise concerns.

Platform algorithms control work allocation, performance monitoring, wages, and supply-demand matching, raising concerns about algorithmic biases and burnout.

"About 40 per cent of gig workers report earnings below Rs 15,000 per month," the Survey said, adding that limited skilling and fears of job losses due to technological advances such as Artificial Intelligence (AI) and Machine Learning (ML) exacerbate worker vulnerability.

"Platforms have become essential gig-market infrastructure for finding workers and work. This concentration of power raises concerns over fees, algorithms, and worker protections. Policy should address this through competition rules, data access, and algorithmic transparency, while reorganising the social contract so that gig work benefits workers more fairly.

"Policy can reduce the cost gap between regular and gig work by limiting incentives to avoid mandatory benefits and by setting minimum per-hour or per-task earnings (including waiting time), encouraging formal employment and raising incomes for low- and medium-skilled gig workers," the Survey noted.

Identifying limited access to productive assets as a major hurdle for upward mobility, the Survey suggested that platforms and employers should be encouraged to "co-invest" in assets and training.

"Many cannot upgrade from low- to medium-skilled gigs because they lack tools (for example, a bike, car, or specialised equipment)," the document observed.

It argued that such co-investment would help workers progress into more secure, higher-quality jobs.

Gig workers in India -- including quick commerce and food delivery riders -- recently staged strikes and protests through their unions to demand better payouts, improved working conditions, formal recognition under the country's labour laws and removal of tight 10-minute delivery deadlines, with their unions taking up the issue with the Union Ministry of Labour and Employment.

Consequent to the agitation, the government asked e-commerce players to remove 10-minute delivery branding from their platforms.

India's gig economy has undergone a structural shift, with the workforce expanding 55 per cent to 1.2 crore in FY25 from 77 lakh in FY21. It now accounts for more than 2 per cent of the total workforce in India.

Growth in gig workers has outpaced overall employment, with non-agricultural gigs forecast to make up 6.7 per cent of the workforce by 2029-30 and contribute Rs 2.35 lakh crore to the GDP.

Climate action is no longer an environmental add-on but a core component of India's development strategy, and with the global north dithering on their own climate action, the country must ensure that development gains are not lost, according to the Economic Survey 2025-26.

India has not yet reached its peak energy demand, and ensuring energy access, affordability, and security remains central to its development pathway but raising climate ambition in India, especially on mitigation, without corresponding support in finance and technology is neither realistic nor equitable, said the pre-Budget document document tabled in the Lok Sabha.

With India aiming to become a developed nation by 2047, the survey noted that it would require achieving high, inclusive, and environmentally sustainable growth.

"This will necessitate a transformation in consumption and production patterns, as well as technological and policy reforms," it said.

Although India's per capita emissions remain well below the global average, climate change poses risks to livelihoods, infrastructure, and economic stability, the survey said, adding, "Adaptation is, therefore, central to India's climate strategy, driven primarily by public investment and community-based action." Asserting that "climate action is no longer an environmental add-on but a core component of India's development strategy", the survey said, "For India, adaptation has rightly emerged as the cornerstone of climate-resilient growth, delivered primarily through public investment, state-led planning, and community institutions." The survey said India is pursuing a balanced mitigation pathway, scaling renewables, battery storage, and nuclear energy in line with the objective of energy security and industrial competitiveness.

"However, inadequate global capital flows to developing countries remain a significant constraint, underscoring the need to reform multilateral financial institutions and to strengthen domestic financial systems," it said.

Hitting out at developed nations for their lackadaisical attitude towards climate commitments, the survey said,"Even the new NDCs (Nationally Determined Contributions) for 2035 of major developed economies show only limited enhancement in their climate mitigation goals, backpedalling on their commitments under the Paris Agreement, despite the fact that these countries reached their peak emissions decades ago, vis-A -vis developing countries like India." It further said to add to the weakening of global efforts against climate change, the climate finance commitments to the developing countries continue to remain diluted.

"The clear signals from the global north, which are dithering on their own climate action, warrant that India must place adaptation centre stage in India's climate action story to ensure that development gains are not lost," it asserted.

It, however, said, "Raising climate ambition in India, especially on mitigation, without corresponding support in finance and technology is neither realistic nor equitable." A credible and orderly transition from fossil fuels depends on the timely availability of reliable, non-fossil energy sources such as nuclear power, alongside a well-defined peak-emissions pathway, the survey said.

It suggested a push towards establishing a credible national platform, backed by predictable and adequate international finance, that can help India develop climate projects, enhance their bankability, and enable the required climate action.

Stating that climate finance remains the binding constraint, the survey said the gap between global capital availability and climate investment needs in developing countries reflects structural weaknesses in the international financial architecture rather than a lack of ambition or bankable projects.

While India's experience highlights the importance of robust domestic financial markets, strong development banks, effective municipal finance, and credible regulatory frameworks, the survey however, said domestic resources alone cannot meet the required investment scale.

Noting that environmental regulation is increasingly becoming a facilitator of sustainable growth, the survey said,"India's thoughtful transition toward risk-based regulation, market-oriented instruments, digital compliance systems, and a framework of trust-based governance highlights the potential for environmental protection to coexist harmoniously with improved business operations." P

Effective implementation of Labour Codes would play a key role in supporting formal employment and improving security for women and gig workers, the Economic Survey for 2025-26 has stated.

The document, tabled in Parliament on Thursday, noted that four codes were notified (on November 21, 2025), and rules are expected to be in place in the next few months.

It suggested that as definitions of work continue to evolve, dynamic labour policy and flexible regulatory frameworks would ensure employment expansion, worker security and well-being.

The draft rules under the four codes -- Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 -- were pre-published on December 31, 2025, for stakeholder comments.

India has recorded significant employment growth in recent years, supported by structural reforms, tax rationalisation, and a sustained focus on skill development, it noted.

The employment and skilling ecosystem is being reshaped by demographic shifts, technological change, and evolving industry needs, including the expansion of gig and platform work, it pointed out.

Amid these developments, "the effective implementation of Labour Codes would play a key role in supporting formal employment and improving security for women and gig workers", it stated.

On the skills front, it stated that the flexible vocational pathways starting at the school level will be required, going forward.

Targeted skilling for women and youth in high productivity sectors will be critical for inclusive outcomes, it suggested.

As India moves ahead in its growth journey, advancing institutional convergence and fostering a whole-of-government approach would enable the skilling and employment initiatives to operate in a coherent manner, it suggested.

The development of an information system that brings together data from e-Shram on unorganised workers, NCS (National Career Service portal) on job vacancies and required skills, and SIDH on training opportunities can lay the foundation for an integrated digital public infrastructure, it suggested.

This could set the stage for a sharper emphasis on industry-driven skilling, which remains central to building job-ready talent and strengthening skill-industry linkage, it pointed out.

It noted that India's workforce of over 56 crore holds tremendous potential for its economic growth.

Labour market indicators point to a steady job market, with improving labour force participation, declining unemployment, and robust job creation in both the organised and unorganised sectors, it noted.

To fully harness the demographic dividend, creating quality jobs with sustainable livelihoods is essential, it suggested.

Structural barriers to female participation are being addressed through the provision of safe, affordable accommodation and flexible and hybrid work arrangements, it noted.

There is a growing focus on expanding social security, income protection, and grievance redressal mechanisms for gig and platform workers to safeguard their well-being, it noted.

While addressing the quantity of labour, it is equally important to improve its quality, as economic growth relies on both the size and capabilities of its labour force, it suggested.

To achieve this, opportunities for vocational education at all levels are vital for strengthening the skill ecosystem and realising the Viksit Bharat's vision, it suggested.

The labour markets in India are undergoing significant structural transformations driven by digitalisation, green energy transition, and emerging forms of employment such as gig and platform work, it noted.

In the post-pandemic growth phase, the emphasis has shifted from the quantity of jobs to the quality of work, reflecting a more inclusive and sustainable vision of the labour market.

It suggested that policies should promote flexible work, hybrid models, and gender-responsive standards, including maternity benefits, equal pay, and protections against harassment.

The newly enacted Labour Codes now allow women workers to work from home (Section 59(5), Code on Social Security 2020) after availing themselves of the maternity benefit (Section 60, Code on Social Security 2020).

Recent policy initiatives have prioritised identifying unorganised workers and enhancing their integration with the formal economy through the welfare and skill development systems.

The Code on Social Security, 2020 (CSS) defines unorganised workers as home-based, self-employed or wage workers in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947.

The e-Shram portal is steadily bridging the gap between informal and formal employment, serving as a key institutional mechanism for extending social protection to unorganised workers, it noted.

The portal serves as a National Database of Unorganised Workers, which includes data on construction workers, migrant workers, gig and platform workers, street vendors, domestic workers, and agriculture workers.

As of January 2026, the portal has successfully registered over 31 crore unorganised workers.

It noted that women account for 54 per cent of total registrants, substantially strengthening the reach of gender-focused welfare schemes.

Each registrant is assigned a Universal Account Number (UAN), which is linked to their Aadhaar and mobile number, ensuring the portability of scheme benefits when workers move across platforms, locations, or employment arrangements.

The four Labour Codes have consolidated 29 central laws to streamline regulations and extend protections to workers.

Complementing the roll-out of the Centre's Labour Codes, 32 states/UTs have published draft rules under the Codes, it noted.

The Labour Codes have formally recognised gig and platform workers, expanding social security, welfare funds, and benefit portability.

Going forward, ensuring algorithmic transparency and promoting worker-friendly practices will be crucial, it suggested

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, the Economic Survey 2025-26 said on Thursday.

To sustain the momentum in India's trade performance amid global economic uncertainties, the country is actively pursuing a diversified trade strategy, it said.

The country has concluded FTAs with various countries, including the UK, Oman, New Zealand, the European Union (EU), Australia and the UAE.

"An expanding network of FTAs supports India's trade strategy by offering reliable market access amid global uncertainty," the survey tabled in Parliament said.

These pacts enable export-focused firms to boost production and become more integrated into the global value chain (GVC), it added.

"Furthermore, by exposing firms to international competition, FTAs improve export competitiveness, encouraging firms to prioritise productivity and reliability over reliance on access-based benefits," it said.

It added that enhancements in export competitiveness increasingly depend on state-level implementation, as states play a vital role in providing the infrastructure, regulatory certainty, and administrative coordination that export-focused firms need.

Ongoing negotiations for a trade agreement with the US are expected to conclude during the year, a development that could help reduce uncertainty on the external front, according to Economic Survey 2025-26.

For India, it said, the global conditions translate into external uncertainties rather than immediate macroeconomic stress.

Slower growth in key trading partners, tariff-induced disruptions to trade and volatility in capital flows could intermittently weigh on exports and investor sentiment, the Survey said.

"At the same time, ongoing trade negotiations with the United States are expected to conclude during the year, which could help reduce uncertainty on the external front," it said.

India and the US are negotiating a bilateral trade agreement since March last year. So far, six rounds of negotiations have been held. Talks are going slow as the Trump-administration has imposed a steep 50 per cent tariffs on Indian goods from August last year.

A delegation from the office of the US Trade Representative, led by Deputy US Trade Representative Ambassador Rick Switzer, was here in December 2025 for trade talks.

The visit of US officials marks their second trip since the imposition of a 25 per cent tariff and an additional 25 per cent penalty on Indian goods entering the American market due to the purchase of Russian crude oil.

India is currently subject to an effective export tariff rate of 50 per cent on goods exported to the US, and this rate is among the highest imposed on any country.

"There has been progress in negotiations of the trade deal between the two countries," the Survey said.

It added that the global economic landscape is becoming increasingly unpredictable, driven by tariff increases, supply chain adjustments, and higher regulatory hurdles.

"For Indian industries, the current wave of US tariff implementations and stricter non-tariff barriers presents a significant challenge, particularly for export-oriented sectors," it said.

Further, it said there has been some specific impact of the tariffs, Indian exporters in some labour-intensive and small-scale sectors are showing resilience by shipping goods to alternative destinations.

India's exports to the US have declined during April-November 2025, but registered positive growth in other countries

India's pharmaceutical industry is shifting from a volume-driven to a value-driven approach, with greater emphasis on complex generics, biosimilars, and innovation, to move up the value chain, according to Economic Survey 2025-26.

The Indian pharmaceutical industry is the world's third-largest by volume, meeting approximately 20 per cent of global generics demand, with exports to 191 countries in FY25, it stated.

In FY25, the sector's annual turnover reached Rs 4.72 lakh crore, with exports growing at a CAGR of 7 per cent over the last decade (FY15 to FY25), it added.

Over 50 per cent of the exports are directed to highly regulated markets such as the US and Europe, it said.

India ranks 11th globally in pharmaceutical exports by value, with a 3 per cent share, and medical devices exports have grown significantly from USD 2.5 billion in FY21 to USD 4.1 billion in FY25, though there exists substantial scope for further expansion, it pointed out.

To move up the value chain, the industry is shifting from a volume-driven to a value-driven approach, with greater emphasis on complex generics, biosimilars, and innovation, the Economic Survey stated.

Likewise, scaling up the medical devices sector necessitates reducing import dependence through the adoption of advanced manufacturing technologies such as AI and 3D printing, along with streamlining global certification processes to strengthen international market access, it added.

Beyond generics, India is a global leader in low-cost vaccine supply, providing a majority of the world's diphtheria, tetanus and pertussis (DPT), Bacillus Calmette-Guerin (BCG) and measles vaccines.

Moreover, India's medical devices sector is also rapidly becoming globally competitive, with exports to 187 countries in FY25, the Economic Survey stated. The industry now manufactures high-end equipment, including MRI and CT scanners, linear accelerators, cardiac stents, and ventilators, it added.

This expansion into sophisticated imaging and life-support technologies marks a significant shift toward high-tech medical manufacturing, the Survey stated.

The Economic Survey on Thursday projected the GDP growth in the range of 6.8-7.2 per cent for the next fiscal year on the back of the cumulative impact of reforms, and said the economy remains on a stable footing.

The projection is a tad lower than the estimates of 7.4 per cent in the current fiscal.

Amid the domestic currency depreciating steeply in recent months, the Economic Survey 2025-26 said the rupee's valuation does not accurately reflect India's stellar economic fundamentals and that the rupee is punching below its weight.

"Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now. However, it does cause investors to pause. Investor reluctance to commit to India warrants examination," it said.

The document, prepared by a team of economists led by Chief Economic Advisor V Anantha Nageswaran, however, added that a strong and stable currency is a natural corollary for achieving the goal of the Viksit Bharat and global influence.

Rupee is a casualty of foreign capital flows drying up, it added.

The document tabled in Parliament by Finance Minister Nirmala Sitharaman emphasised that India is relatively better off than most other countries due to its strong macro fundamentals.

The cumulative impact of policy reforms over recent years appears to be lifting India's medium-term growth potential to near 7 per cent, it said, and made a strong case for a deeper system-level institutional capacity that factors in geopolitical implications of India's rise.

India needs to prioritise domestic growth in an uncertain global environment, as well as greater emphasis on buffers and liquidity, it added.

The global environment is being reshaped by geopolitical realignments that will influence investment, supply chains and growth prospects, it added.

On the price situation, it said a subdued trajectory of core inflation indicates strengthening of supply-side conditions across the economy.

The pre-Budget document further said that based on the broad trends observed during the year, the central government remains well on track to achieve its envisaged fiscal consolidation path, aiming to attain a fiscal deficit target of 4.4 per cent of GDP in 2025-26.

As of November 2025, the Union government's fiscal deficit stood at 62.3 per cent of the Budget Estimates.

"Markets have acknowledged and rewarded the government's commitment to fiscal discipline through lower sovereign bond yields, with the spread over US bonds declining by more than half," it said.

It noted that despite heightened tariffs imposed by the United States, merchandise exports grew by 2.4 per cent (April–December 2025), while services exports increased by 6.5 per cent. Merchandise imports during April-December 2025 increased by 5.9 per cent.

The Survey said that GST rejig and other reforms converted global uncertainty into an opportunity, and the next fiscal year would be a year of adjustment as the economy adapts to these changes.

In the backdrop of India entering into host of free trade agreements, the Survey said realising potential of trade agreements requires India to produce competitively.

The FTA with Europe will strengthen India's manufacturing competitiveness, export resilience and strategic capacity, the Survey said.

The document also said that, in most years, remittances have surpassed gross FDI inflows, underscoring their importance as a key source of external funding. As a result, the current account deficit remains moderate at 0.8 per cent of GDP in H1 FY26.

The document has also said that there is no space for pessimism, but we need to be cautious amid global uncertainty.

Possible eruption of multiple global crises presents an opportunity for India to play a role in shaping global order, it added.

The Economic Survey has a separate chapter on AI and its impact.

Correction in overly optimistic asset valuations will happen if the AI boom fails to deliver the anticipated productivity gains, it said.

On India's fast-growing aviation sector, the Survey said India's civil aviation sector is on a sustained growth trajectory supported by a conducive policy environment, rising demand, and steady infrastructure expansion.

India has emerged as the world's third-largest domestic aviation market, but current passenger volumes represent only a fraction of the country's potential, it added.

Meanwhile, the Survey has pitched for a policy to reshape the terms of work for gig workers

Raising concerns on the growing consumption of ultra processed foods (UPF) containing high fat and sugar, the Economic Survey has called for exploring a ban on their advertisements from morning to late night.

It has also called for restrictions on marketing of infant and toddler milk, and beverages.

The Survey suggested a "front-of-pack nutrition labelling" of high-fat, sugar and salt (HFSS) food with a warning, restricting marketing to children, and ensuring that trade agreements do not undermine public health policy.

India is one of the fastest-growing markets for sales of UPF, which is contributing to chronic diseases worldwide and widening health inequalities.

The Survey tabled by the Economic Survey in Parliament by Finance Minister Nirmala Sitharaman on Thursday suggested a "multi-pronged approach" for tackling the increase of human intake of UPF -- popularly known as junk foods -- which includes burger, noodles, pizza, soft drinks, etc, and said it is contributing to chronic diseases worldwide and widening health inequalities.

It grew more than 150 per cent from 2009 to 2023. Retail sales of UPFs in India surged from USD 0.9 billion in 2006 to nearly USD 38 billion in 2019, a 40-fold rise. "It is during the same period that obesity has nearly doubled in both men and women," the Survey said.

However, improving diets cannot depend solely on consumer behaviour change, and will require coordinated policies across food systems that regulate UPF production, promote healthier and more sustainable diets and marketing.

"The option of a marketing ban on UPFs from 0600 hours to 2300 hours for all media, and enforcing restrictions on the marketing of infant and toddler milk and beverages, could be explored," said the Survey.

Chile is an example of a country with integrated laws. Advertisement restrictions are also done in other countries, such as Norway and the UK.

"Recently, the UK has banned junk food advertising before 9 pm on TV and online to reduce children's exposure and curb childhood obesity. Further action on other marketing activities, including school and college sponsorship of events by UPF manufacturers, can be designed," it said.

Besides traditional media, it has also recommended UPF marketing restrictions to be mandatory and include digital media.

According to survey, Rule 7 of the Advertisement Code prohibits misleading, unverified, or unhealthy advertisements, however it does not define "misleading" with measurable or nutrient-based criteria, leaving interpretation subjective and inconsistent.

Similarly, the Central Consumer Protection Authority (CCPA) Guidelines for Prevention of Misleading Advertisements (2022) mandate that advertisements must not exaggerate health benefits or exploit children.

"...yet they lack clear nutrient thresholds or a framework for identifying misleading claims in food marketing," it said, adding, "This regulatory ambiguity allows companies marketing UPFs to continue making vague 'health', 'energy', or 'nutrition' cues without violating any clearly defined standard, highlighting a critical policy gap that needs reform."

India's agriculture sector, crucial to achieving the government's vision of a developed nation by 2047, faces significant sustainability and productivity challenges despite recent growth, the Economic Survey said.

The survey called for key reforms, including overhauling the fertiliser sector, boosting research and development, strengthening irrigation systems and promoting crop diversification.

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 said.

The sector has registered an average annual growth rate of around 4.4 per cent over the past five years at constant prices, with livestock and fisheries leading the gains. In the second quarter of fiscal year 2025-26, agriculture grew 3.5 per cent.

"Agriculture will be central to achieving Viksit Bharat, driving inclusive growth and improving the livelihoods of millions," the survey tabled in Parliament said, referring to Prime Minister Narendra Modi's vision of a developed India.

However, climate change poses significant challenges, including erratic weather patterns, rising temperatures, and extreme events that affect crop yields, the survey warned. Water scarcity remains critical in regions dependent on monsoon rainfall.

PRODUCTIVITY GAPS

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While India's agricultural growth has exceeded the global average of 2.9 per cent, yields across several crops, including cereals, maize, soybeans and pulses, continue to lag global averages.

The gross irrigated area has increased to 55.8 per cent of the gross cropped area in 2022-23 from 41.7 per cent in 2001-02, but significant disparities persist across states and crops, with irrigation coverage ranging from less than 15 per cent for millets to about 67 per cent for rice.

Fertiliser use remains inefficient, with the nitrogen-phosphorus-potassium ratio deteriorating in recent years largely due to price distortions favouring nitrogenous fertilisers, the survey said.

The government has strengthened cooperatives and farmer-producer organisations (FPOs) to expand access to credit and technology. Digital initiatives such as the Digital Agriculture Mission and the e-NAM platform, which connects farmers with markets, are increasing transparency.

India has made notable progress in dairy, poultry, fisheries and horticulture production, which contribute significantly to GDP.

The survey said Indian agriculture is entering a phase of new opportunity, supported by advances in irrigation, digital extension, improved storage, and the strengthening of cooperatives and value chains.

"Yet, structural challenges such as small landholdings, climate risks, productivity gaps, and weak market integration continue to weigh on farm incomes," the survey said.

WAY FORWARD

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The survey said the way forward requires deepening reforms, promoting climate-resilient technologies, empowering FPOs, improving markets and logistics, and enhancing risk management.

With sustained investment and innovation, agriculture can become more resilient, competitive, and income-enhancing, it said.

Strengthening private sector participation in food processing, cold chain logistics and high-value agricultural products will be crucial for competitiveness in domestic and export markets, it added.

Expanding high-growth sectors, such as horticulture, agroforestry, dairy, poultry, and fisheries, can further support inclusive economic development and job creation, particularly for rural communities, it said.

Despite recent gains, the dairy sector faces feed and fodder shortages, while the fisheries sector needs to expand value addition and processing capacity to reduce dependence on a narrow export basket, the survey added

The Economic Survey on Thursday said trade policy in agricultural exports is used to meet short-term objectives amid price and production volatility, but frequent policy changes disrupt supply chains, create uncertainty, push foreign buyers elsewhere, and make lost export markets hard to regain.

It said that agricultural exports are influenced by a range of supply-side factors, including food security, processing facilities, infrastructure bottlenecks, and various regulations.

However, given the volatility in domestic prices and production of certain commodities, trade policy has often been employed to achieve short-term domestic objectives, such as managing inflation through product-specific interventions, including ad hoc export bans or the imposition of minimum export prices, it said.

Although these measures, it said, may temporarily stabilise domestic prices, they risk longer-term reputational costs, particularly as India is widely regarded as a source of high-quality agricultural products.

"Frequent policy changes can significantly disrupt export supply chains, create market uncertainty and cause foreign buyers to switch to other sources. Export markets once lost are not easily recovered," it added.

According to estimates, the country has the potential to reach USD 100 billion of combined exports of agriculture, marine products and food and beverage in the next four years.

The Survey said that measures such as subsidised distribution of essential food items via the public distribution system, managing buffer stocks and intervening in the market via an open market sale scheme are the policy options available to ensure availability of agricultural products at fair prices for the domestic market.

It is possible to stabilise domestic availability and prices while enabling farmers to tap global markets for better incomes, the Survey 2025-26 added.

By maintaining a delicate balance between fulfilling domestic demand and harnessing its export potential, it noted that India's remarkable achievements in agricultural production can translate into export-led growth, enabling the country to achieve its goal of USD 100 billion in agricultural exports.

"Exports also make farmers more productive and competitive by fostering knowledge accumulation and market feedback," it said.

It also said that as an aspirational economy, India will see its imports rise steadily and that is the global experience over centuries.

"India must explore all opportunities to increase its export earnings to pay for the import needs of a growing economy. Agricultural exports are a low-hanging fruit with immense export potential," it said, adding they carry international leverage for India and policies should be aligned with this imperative.

New Delhi | Finance Minister Nirmala Sitharaman on Thursday tabled the Economic Survey 2025-26 in the Lok Sabha, an annual report card of the country's economic performance in the financial year.

According to sources, the Economic Survey is likely to project a 6.8-7.2 per cent growth for 2026-27, a shade lower than 7.4 per cent estimated for the current fiscal.

The survey is tabled ahead of the Union Budget and presents a backdrop for the policy actions to be taken in the next financial year.

It will set the broad macroeconomic and policy priorities for the government at a time when the global economy is facing heightened geopolitical uncertainty and fragmentation