Economic Survey: High growth rate estimation conceals weaknesses in agriculture, manufacturing, and exports

The government has claimed that India can maintain its position as the world's fastest-growing major economy, but the Economic Survey 2025-26 reveals that many key sectors are growing at a slower pace than their previous trends, even as the overall GDP growth for FY 2026 is estimated at 7.4 per cent.

The survey, presented in Parliament on Thursday, estimates that GDP growth will rise from 6.5 per cent in FY 2025 to 7.4 per cent in FY 2026. Credit for this is attributed to continuous domestic reforms and heavy public investment in infrastructure.

However, a closer look at each sector shows that this impressive performance is primarily due to the services sector, while agriculture, parts of industry, and the external sector are performing weakly compared to their long-term potential and capacity.

Agriculture and allied activities, which provide livelihood and support to nearly half of the country's population, are estimated to grow by just 3.1 per cent in FY 2026 — significantly lower than the sector's 10-year average of 4.45 per cent recorded between FY 2016 and FY 2025.

Although growth was 4.6 per cent in FY 2025, the survey notes that in the first half of 2026, agricultural expansion slowed to 3.6 per cent, indicating persistent structural bottlenecks in crop productivity.

Broadly, while industrial growth is improving, the picture remains mixed. The industrial sector is projected to grow by 6.2 per cent in FY 2026, only marginally higher than last year's 5.9 per cent.

Manufacturing has shown a good recovery, growing by 8.4 per cent in the first half of 2026 compared to 4.8 per cent last year. Still, this surge follows several years of sluggish performance and does not fully compensate for the long-standing stagnation.

Construction, another key employment-generating sector, is likely to slow to 7 per cent in 2026 from a high base of 9.4 per cent in 2025.

The external sector, considered a measure of global competitiveness, also remains below its potential. Real export growth is estimated at 6.4 per cent in FY 2026, only slightly higher than in FY 2025 and quite modest given India's aspirations to become a global manufacturing and export hub.

In contrast, the services sector continues to dominate growth, with an estimated 9.1 per cent increase in 2026.

Financial, real estate, and professional services, along with public administration and defence, are expected to see nearly 10 per cent growth, highlighting the economy's increasing dependence on services-led expansion.

Although the survey has raised India's growth rate to 7 per cent in the medium term, the uneven performance across sectors clearly signals a growing divide between the headline growth rate and the real economy.