New Delhi, Jan 29 (PTI) 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. PTI TEAM ANZ HVA