What the Economic Survey 2025–26 Really Tells Me About Our Money, Work, and Society – Post2/2

 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.

 Bucket 5: Technology — Promise, Productivity, and Financial Excess

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.

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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.

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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.

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 My Closing Reflection: What I’m Personally Watching

• 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.

 

Annexures:

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