India moves from rapid expansion to long-term consolidation, the focus must increasingly shift from speed to quality, coordination, and institutional maturity.
Economic Survey reveals about our next growth frontier (Photo: File)
India's Economic Survey 2025-26 arrives with reassuring headlines. Growth remains strong, inflation is contained, and infrastructure is expanding at a historic pace. Together, these achievements reflect sustained policy focus and institutional capacity. Yet, alongside these visible successes, the Survey also highlights a set of emerging challenges that point to the next phase of India's development journey.
The message is clear: as India moves from rapid expansion to long-term consolidation, the focus must increasingly shift from speed to quality, coordination, and institutional maturity. The next growth frontier lies not only in building more, but in building better.
Nowhere is this transition more evident than in India's cities. The Survey notes that many urban roads are increasingly used for parking and private vehicles rather than efficient movement. Congestion, therefore, reflects rising prosperity and motorisation as much as infrastructure gaps. The economic implications are significant.
In Delhi, an unskilled worker may lose up to Rs 19,600 annually due to traffic delays. In Bengaluru, productivity losses have reached nearly Rs 11.7 billion in a year. Commuters in major metros now spend between 76 and 117 hours annually in traffic. These figures underline the importance of integrated urban planning.
Investments in metro rail, flyovers, and expressways have expanded mobility, and the next step is to align housing, transport, and land use more closely. With coordinated planning, India's cities can evolve into engines of both efficiency and liveability.
Alongside physical congestion, the Survey highlights a quieter but equally important challenge: excessive screen time and digital overuse. It links prolonged smartphone exposure to learning difficulties, mental health pressures, and reduced attention spans. By recognising cognition and attention as economic assets, the Survey reflects a forward-looking understanding of productivity.
India's digital transformation has dramatically expanded access to education, finance, and public services. Going ahead, complementary efforts in digital literacy, wellness, and responsible usage can ensure that technology continues to strengthen rather than strain human capital. Few policy documents globally address this issue so directly, placing India at the forefront of thinking on digital-age development.
India's external sector presents another area of opportunity. Petroleum products, telecom instruments, and pharmaceuticals currently account for about a quarter of merchandise exports. While this reflects sectoral strengths, it also highlights the scope for deeper diversification.
Encouragingly, non-petroleum exports have reached historic highs, indicating steady progress. With continued support for manufacturing clusters, logistics reforms, and trade facilitation, India is well positioned to expand its presence across new product categories and global value chains. A broader export base will enhance resilience and reinforce India's role as a reliable partner in international trade.
One of the Survey's most insightful observations concerns the relationship between sectoral growth and institutional development. India's IT and services sector has achieved global leadership, often operating independently of local infrastructure constraints. Manufacturing, by contrast, depends heavily on land systems, power supply, logistics networks, and labour regulations.
Strengthening manufacturing, therefore, also strengthens governance capacity, regulatory effectiveness, and administrative coordination. In this sense, manufacturing-led growth supports not only employment but also institutional deepening. Continued reforms in this area can reinforce both economic competitiveness and state capacity.
India's physical and digital expansion over the past decade has been remarkable. The airport network has doubled. Dedicated freight corridors and inland waterways are expanding. Digital public infrastructure has earned global recognition. These foundations create an opportunity to move towards a new phase focused on optimisation and integration.
As infrastructure scales, parallel investments in urban management, regulatory systems, and inter-agency coordination can multiply returns. Roads, housing, transit, digital platforms, and industrial parks work best when planned as interconnected systems. The Survey signals that India is now entering this phase of system refinement.
India's development story is at a turning point, one defined not by constraints, but by possibilities. The challenge ahead is to design cities that prioritise people, education systems that nurture attention and creativity, industries that compete confidently on global platforms, and institutions that collaborate seamlessly across levels of government.
In this phase, progress will be measured not only by headline growth rates, but by how smoothly economic and social systems function in everyday life—on roads, in classrooms, in workplaces, and in global markets. The Economic Survey 2025-26 offers a valuable roadmap for this transition. By highlighting emerging bottlenecks alongside enduring strengths, it invites policymakers, businesses, and citizens alike to participate in building the next chapter of India's growth story—one defined by resilience, inclusiveness, and long-term excellence.
Prof Gourav Vallabh is Member, Economic Advisory Council to the Prime Minister & Professor of Finance. Views expressed are personal.
