Post 1 closed with a simple idea: growth alone is no longer enough. In a volatile world, resilience determines how long growth can be sustained—and who benefits from it.
Post 2
turns to the mechanisms that shape that resilience. It looks at how technology
is changing productivity and risk, why capital remains expensive even when
inflation eases, and how policy and social reforms—from jobs and skills to
cities and AI governance—will ultimately decide whether India’s economic
progress translates into stable businesses, secure incomes, and durable
household wealth.
I
appreciated the Survey’s honesty here.
India is
pushing AI and digital public infrastructure aggressively—and rightly so. But
the Survey also warns of global financial excess, citing over USD 120
billion of AI-related data-centre investment moved off balance sheets
globally.
Technology
adoption is necessary—but blind optimism is dangerous.
Corporates must focus on applied AI
with measurable productivity gains.
SMEs benefit enormously from digital
rails—but only if technology adoption is paired with process discipline, such
as clear workflows, basic financial controls, compliance, and customer
management. Technology amplifies strengths, but it also amplifies weaknesses.
Working
individuals
should expect role changes, not mass job loss—but reskilling is non-negotiable.
Families should expect volatility in
tech-heavy assets and avoid treating technology themes as one-way bets.
Long-term value is more likely to come from diversified exposure to applied
technology rather than concentrated bets on narratives.
Long-term value lies in boring, applied
technology.
Bucket
6: Interest Rates — Why Capital Will Stay Expensive
One of
the Survey’s most important insights is this: India’s high cost of capital is
structural, not cyclical.
As long
as India runs a current account deficit and depends on foreign savings, it must
pay a risk premium. RBI easing can help at the margin—but capital will not
become sustainably cheap like it is in surplus economies.
Corporates must prioritise ROCE over
leverage.
SMEs will find credit selective, not
abundant.
Working
individuals Working
individuals should avoid over-optimising loan timing and instead focus on
borrowing discipline—loan tenure, repayment capacity, and risk buffers—since
interest rates are unlikely to become structurally low for long periods.
Families should stop assuming
debt-fuelled asset appreciation as a default wealth strategy and place greater
emphasis on cash-flow resilience, diversification, and the ability to withstand
periods of higher interest rates or slower asset price growth.
Bucket
7: Policy & Social Reforms — The Invisible Foundations of Growth
This is
where the Survey becomes quietly profound—and where ambiguity matters most. It
makes one thing clear: growth without social and institutional reform will
stall.
What stood out to me
- Manufacturing alone will
require ~1.9 crore additional skilled workers, but skill pipelines remain
uneven.
- Employment growth must come
from private-sector-led job creation, not public absorption.
- Poverty has reduced
materially, but vulnerability remains high near the threshold.
- AI needs governance, data
stewardship, and human capital—not just compute.
- Urban India suffers from governance
deficits affecting 30–40% of city dwellers, especially in housing,
mobility, sanitation, and municipal capacity.
Where
ambiguity
remains
- Labour codes: Implementation timelines
remain unclear. Even a 5–10% compliance cost increase could
materially affect SMEs.
- Environmental easing: Relaxed green norms may
improve ease of doing business—but long-term health and urban liveability
trade-offs are unresolved.
- Urban governance: Cities lack fiscal and
administrative autonomy despite driving growth.
- AI & jobs: Direction is clear, but
transition timelines are not.
For
policy enthusiasts,
this bucket is critical: India’s next growth phase depends less on announcing
reforms and more on execution, sequencing, and trade-offs—especially where
short-term economic gains intersect with long-term health, employment quality,
and urban liveability.
- As a citizen: skills and
health are the real safety net.
- As a taxpayer: fiscal
discipline is encouraging—but state-level slippage worries me.
- As a business observer:
productivity, exports, and capital discipline are the only durable moats.
- As a family wealth planner:
I’m focusing less on returns and more on resilience—currency
diversification, human capital, and avoiding leverage excess.
The
Economic Survey 2025–26 doesn’t promise comfort. It asks for maturity.
In a
world that rewards resilience over speed, India must keep running the marathon
like a sprint—without tripping.
|
Bucket |
Theme |
One-Line Standout Takeaway |
|
Bucket 1 |
Revenue Generation |
India’s future incomes will grow less from
consumption alone and more from productivity, formalisation, and
participation in real economic value chains. |
|
Bucket 2 |
Exports
& Imports |
Without
stronger manufacturing exports, India’s growth will remain exposed to
currency swings and global capital moods, regardless of services performance. |
|
Bucket 3 |
Productivity, People & Risks |
Infrastructure has improved, but India’s biggest
growth constraint is now people—skills, health, and productivity determine
who pulls ahead and who falls behind. |
|
Bucket 4 |
Exchange
Rate |
In
a geopolitically uncertain world, currency volatility is structural, and
individuals, businesses, and families must plan for it rather than expect
stability. |
|
Bucket 5 |
Technology |
Technology will reward disciplined adopters and
punish hype-driven bets—productivity, not novelty, is the real
differentiator. |
|
Bucket 6 |
Interest
Rates |
Capital
in India is likely to remain expensive, making cash-flow discipline and
resilience more important than leverage or rate timing. |
|
Bucket 7 |
Policy & Social Reforms |
India’s next phase of growth will depend less on
new announcements and more on execution, sequencing, and managing social
trade-offs. |
Economic Survey 2025–26: Key Numbers, Trade-offs and Watchpoints
ANNEXURE A: Macro Stability & Growth
Table
A1: India’s Growth & Fiscal Consolidation Path
|
Indicator |
FY21 |
FY23 |
FY25 (RE) |
FY26 (BE) |
|
Real GDP Growth (%) |
-5.8 |
7.2 |
~7.0 |
~7.0 |
|
Fiscal Deficit (% of GDP) |
9.2 |
6.4 |
4.8 |
4.4 |
|
Inflation (CPI avg, %) |
6.2 |
6.7 |
~5.4 |
~4.5 |
|
Public Capex Growth (%) |
— |
+33 |
+28 |
+17 |
📈
GDP Growth vs Fiscal Deficit (FY21–FY26)
➡️ Shows India
growing while tightening fiscally, unlike most EM peers.
ANNEXURE
B: Revenue & Export Structure
Table
B1: Export Growth Composition (2020–25 CAGR)
|
Export Category |
CAGR (%) |
|
Merchandise Exports |
~6.4 |
|
Services Exports |
~10–11 |
|
Total Exports |
~9.4 |
Table
B2: What Strong-Currency Countries Have in Common
|
Country |
Manufacturing Export Strength |
Currency Stability |
|
Germany |
Very High |
Very Stable |
|
Japan |
High |
Stable |
|
South Korea |
High |
Stable |
|
India |
Moderate |
Volatile |
📊
Services
vs Manufacturing Exports – India vs Peers
➡️ Highlights why
services alone cannot anchor the rupee.
ANNEXURE
C: Productivity, Jobs & Human Capital
Table
C1: Workforce Stress Points
|
Area |
Survey Insight |
|
Manufacturing jobs |
~1.9 crore skilled workers needed |
|
Female LFPR |
Improving but still structurally low |
|
Skill mismatch |
Binding constraint for MSMEs |
|
Health risks |
Obesity & NCDs flagged as
productivity risks |
👷
Job Creation vs Skill Readiness Gap
➡️ Shows demand
racing ahead of capability.
India’s current Female Labour Force Participation
Rate (LFPR) for ages 15+ stands at 35.3% (December 2025), based on the latest
available monthly data from the Periodic Labour Force Survey.
ANNEXURE
D: Exchange Rate & Cost of Capital
Table
D1: Sovereign Yield Comparison (2025)
|
Country |
Credit Rating |
10Y Bond Yield (%) |
|
India |
BBB |
~6.7 |
|
Indonesia |
BBB |
~6.3 |
|
USA |
AA+ |
~4.0 |
Table
D2: Structural Drivers of Rupee Volatility
|
Factor |
Structural / Cyclical |
|
Goods trade deficit |
Structural |
|
Capital flow dependence |
Structural |
|
Inflation |
Cyclical |
|
Oil prices |
Cyclical |
💱
Growth vs Currency Performance (Selected Countries)
ANNEXURE
E: Technology & Financial Risk
Table
E1: Technology Opportunity vs Risk
|
Area |
Opportunity |
Risk |
|
AI adoption |
Productivity gains |
Over-leveraged capex |
|
DPI |
Inclusion & efficiency |
Governance gaps |
|
Automation |
Cost control |
Job transition stress |
|
|
|
|
$ Over USD 120 bn of global AI infra spending
shifted off balance sheets → systemic risk if
expectations reset.
ANNEXURE
F: Policy & Social Reforms
Table
F1: Reform Areas & Ambiguities
|
Area |
Reform Intent |
Ambiguity |
|
Labour codes |
Flexibility |
Timeline unclear |
|
Compliance costs |
Formalisation |
5–10% cost impact |
|
Environment norms |
Ease of doing biz |
Health trade-offs |
|
Urban governance |
Efficiency |
Fiscal autonomy is missing |
|
AI governance |
Roadmap |
Execution capacity is unclear |
