India economic growth outlook – A fresh business survey ahead of the Union Budget 2026 shows that India’s economic growth outlook remains broadly optimistic, with robust domestic consumption and political stability underpinning confidence among business leaders and professionals. However, rising concerns about job creation, geopolitical risks and ongoing global uncertainties highlight the nuanced challenges the country faces as it aims to sustain momentum in the year ahead.
The survey, conducted among more than 5,000 respondents — including corporate executives, economists and industry professionals — paints a multifaceted picture of India’s economy: resilient in many respects, but wary of structural and external headwinds. The findings are especially relevant as policymakers prepare the Union Budget, which is expected to balance growth imperatives with social and employment priorities.
Domestic Consumption Anchors Growth Confidence
One of the clearest takeaways from the survey is the pivotal role of domestic consumption in shaping India’s growth narrative. A significant proportion of respondents cited strong private consumption as the economy’s biggest positive factor at present — a signal that internal demand remains a key driver even as external markets and trade conditions fluctuate.
This focus aligns with broader economic data suggesting that Indian households continue to spend on goods and services, supporting sectors from retail to travel and digital services. Consumption has cushioned the economy against global trade shocks and uncertainty, a trend that economists say can help sustain growth even if exports weaken.
Job Market Worries Loom Large
Despite the upbeat tone on growth, concerns about employment and underemployment feature prominently in the survey results. A significant share of respondents identified job creation and skills mismatches as pressing challenges that could temper optimism if not addressed effectively through policy initiatives.
Many business leaders emphasized that while GDP growth projections remain strong, translating that performance into widespread, inclusive job growth — especially in manufacturing and services — is critical for long-term stability. With a large and youthful workforce, India faces the dual task of not only creating new jobs but also ensuring the right skills match industry needs.
Policymakers are likely to take note, with many analysts predicting that the upcoming budget will include targeted incentives for MSMEs, skilling initiatives and programmes aimed at boosting formal employment. Without such measures, job market anxieties could overshadow growth gains for many households.
Geopolitical and Global Risks Remain Major Concerns
Alongside domestic issues, external risks — including geopolitical tensions, volatile oil prices and global economic uncertainty — were flagged as significant factors influencing economic sentiment. A notable portion of those surveyed pointed to these global headwinds as downside risks that could affect growth and investor confidence in the coming year.
India’s vulnerability to oil price shocks is a recurring theme in business discourse, given the country’s status as a net energy importer. Rising energy costs can spill over into inflationary pressures and impact fiscal stability if not carefully managed. The survey findings underscore the importance of strategies that can mitigate such external risks, including diversification of energy sources and deeper engagement in renewable energy transitions.
At the same time, geopolitical tensions — such as shifts in global supply chains or trade policy uncertainties — remain salient concerns for businesses with international exposure. These broader macroeconomic risks are prompting calls for fiscal flexibility and policy responsiveness in the upcoming Union Budget 2026.
Leadership and Policy: Stability as a Growth Asset
Optimism about India’s leadership and policy continuity emerged as another theme in the survey. A strong proportion of respondents cited stable political leadership and consistent policymaking as supportive factors for economic confidence.
This sentiment reflects the belief among many in the business community that predictability in economic policy — especially fiscal and regulatory frameworks — is crucial for investment decisions and long-term planning. In an election year, policymakers must balance stable governance with bold reform measures that drive growth without triggering inflation or fiscal stress.
Implications for Union Budget 2026
With the survey results setting the stage, expectations for the Union Budget 2026 are leaning toward policies that reinforce consumption, support employment creation and provide buffers against global headwinds. There is a strong preference reflected in the survey for fiscal flexibility rather than strict adherence to deficit-cutting targets if economic conditions deteriorate.
Experts suggest that initiatives aimed at enhancing infrastructure spending, MSME support and skill development could help bridge the gap between GDP growth and job creation. At the same time, targeted measures in sectors such as digital technology, renewable energy and healthcare could further diversify growth engines and improve resilience.
The Budget is also likely to consider tax relief measures, incentives for investment, and enhanced capital expenditure to maintain momentum in private sector activity. As policymakers digest survey feedback and macroeconomic indicators, the challenge will be crafting a fiscal roadmap that balances growth with equitable outcomes.
Broader Economic Picture and Outlook
India’s economic growth outlook is also supported by broader data and forecasts from international institutions. For instance, the International Monetary Fund recently raised India’s growth forecast for FY26 to around 7.3%, reflecting stronger-than-expected momentum despite tariff pressures and global headwinds.
Similarly, reports by independent economic consultancies emphasize India’s resilience amid global uncertainty, driven by robust domestic demand and ongoing structural reforms. While headwinds remain, these trends bolster the narrative that India remains one of the fastest-growing major economies globally.
This report is part of FFRNEWS Business coverage, tracking key indicators in India’s economy and policy decisions as the country prepares for the Union Budget 2026. Details in this article are based on the ET Budget Survey 2026, which highlights business leaders’ confidence in growth drivers and concerns about jobs, inequality and global risks.
