New Delhi: India's potential growth rate can jump to 7.5 percent in the next few years if the country puts emphasis on bolstering manufacturing, exports and process reforms, Chief Economic Advisor V Anantha Nageswaran said on Thursday.
Economic Survey 2025-26, tabled in Parliament earlier in the day, has raised the country's potential growth forecast to 7 percent from the earlier projection of 6.5 percent estimated three years earlier.
"If we are able to achieve manufacturing and export competitiveness and pursue further process reforms in the areas of land and cost subsidisation and bring down the cost of manufacturing, the potential 7 percent growth can even rise to 7.5 percent and 8 percent in the next few years," he said in a media interaction after the Survey was tabled in Parliament.
He further said the Economic Survey presented three years ago had projected the maximum potential growth of the Indian economy at 6.5 percent, and it could rise to between 7-8 percent per annum in the medium-term potential reforms.
Over the past three years, he said, reform momentum has strengthened across several areas relevant for medium-term growth.
Manufacturing-oriented initiatives, such as the Production-Linked Incentive (PLI) schemes, FDI liberalisation, and logistics reforms, have supported capacity creation, the Survey said, adding that these efforts have been supported by sustained public investment in physical and digital infrastructure, with effective capex reaching 4 percent of GDP.
The simplification of tax laws and the establishment of various High-Level Committees for regulatory reforms, including those involving state governments, indicate a shift toward greater regulatory clarity and certainty, it said.
Measures targeted at MSMEs, including expanded credit guarantees, wider use of TReDS and the rollout of the Unified Lending Interface (ULI), have sought to ease credit constraints, it said.
The Economic Survey projected the GDP growth in the range of 6.8-7.2 percent 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 percent 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 FY'27 GDP growth projections in the Economic Survey compare with 6.4 percent growth projections by the International Monetary Fund (IMF), 6.5 percent by the World Bank and Asian Development Bank (ADB).
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