Model Answer

The Economic Survey 2025–26 situates India’s growth strategy in a rapidly transforming global economic order marked by geopolitical fragmentation, trade re-shoring, supply-chain realignments, and declining trust in hyper-globalisation. In this context, the Survey argues that India must move beyond the narrow objective of maintaining short-term macroeconomic stability and instead aspire towards achieving “strategic indispensability”—a position where India becomes a reliable, non-substitutable partner in global economic, technological, and strategic ecosystems.

Strategic indispensability refers to the ability of an economy to embed itself so deeply within global value chains, services networks, and strategic sectors that its participation becomes essential for global resilience and growth. Unlike export-led dependence or inward-looking self-reliance, this approach seeks integration without vulnerability, combining openness with domestic capacity and institutional credibility.

The Survey emphasises that macroeconomic stability is the necessary foundation for this ambition. India’s success in maintaining moderate inflation, improving fiscal consolidation through expenditure switching rather than austerity, and building robust foreign exchange buffers enhances investor confidence and policy credibility. However, the Survey cautions that stability alone cannot deliver sustained growth or global relevance without structural transformation.

A key pillar of strategic indispensability highlighted in the Survey is public capital expenditure–led growth. By significantly increasing capital outlay on infrastructure—railways, roads, logistics, defence production, digital connectivity, and renewable energy—the state has sought to crowd in private investment and reduce structural bottlenecks. This capex-driven approach improves productivity, lowers logistics costs, and strengthens India’s competitiveness in global markets, making India a viable alternative manufacturing and investment destination in a fragmented world.

Another critical dimension is India’s growing strength in the services sector, particularly information technology, business services, and Global Capability Centres (GCCs). The Survey notes that services exports have consistently generated large surpluses, offsetting merchandise trade deficits and stabilising the current account. This services-led integration enhances India’s indispensability by positioning it as a knowledge, technology, and management hub within global production networks.

The Survey also recognises the role of selective industrial policy, particularly through Production Linked Incentive (PLI) schemes, in strategically important sectors such as electronics, pharmaceuticals, semiconductors, and clean energy. These measures aim not merely at boosting output but at embedding India into high-value, future-oriented segments of global value chains, thereby reducing import dependence while enhancing export capability.

Further, the Survey highlights Digital Public Infrastructure (DPI) as a unique source of India’s comparative advantage. Platforms such as Aadhaar, UPI, and ONDC have demonstrated the state’s capacity to deliver public goods at population scale with low cost and high efficiency. DPI enhances financial inclusion, formalisation, and productivity while also projecting India as a model for digital governance globally, strengthening trust and institutional credibility.

Finally, the Survey underscores that state capacity and governance quality are decisive enablers of strategic indispensability. Regulatory predictability, contract enforcement, administrative efficiency, and policy continuity determine whether global capital and supply chains perceive India as a dependable long-term partner.

In conclusion, the Economic Survey envisions India’s growth trajectory not merely as a pursuit of higher GDP numbers, but as a strategic project of embedding India into the global economic architecture as a trusted, resilient, and indispensable actor. By aligning macroeconomic discipline with infrastructure investment, services-led integration, industrial upgrading, and institutional capacity-building, India seeks to convert global uncertainty into an opportunity for sustained and meaningful global relevance.