Economic Survey 2025-26: Growth Outlook • FY26 (2025-26): Medium-term growth forecast raised to 7% • FY27 (2026-27): Growth projected between 6.8% – 7.2% Three global scenarios for 2026 Scenario 1 – Best case (40–45%) • Business as usual• Global tensions ease somewhat• Volatility persists• Government interventions stabilise markets Scenario 2 – Multipolar breakdown (40–45%) • Geopolitical rifts persist• Trade conflicts and counter-sanctions• Supply-chain realignments• Prolonged uncertainty Scenario 3 – Worst case (10–20%) • Major global correction, especially in AI-infrastructure investments• Spike in risk aversion• Macro fallout worse than the 2008 crisis
Oil Import Diversification to Reduce India’s Geopolitical Risks
Context Economic Survey (FY26) notes that India is diversifying crude-oil import sources to reduce geopolitical risk exposure. Key facts • Rising imports from: Libya, Egypt, Brazil, U.S., Brunei• Declining imports from: Russia, Saudi Arabia, Iraq, Venezuela Import-share changes (Apr–Nov FY26 vs previous year) • U.S.: 4.6% → 8.1%• UAE: 9.4% → 11.1%• Libya: 0.1% → 0.5%• Egypt: 0.3% → 1.4%• Nigeria: 2.2% → 3.3%
Ethanol Blending and Its Impact on India’s Food Security
Context Economic Survey flags that expansion of ethanol blending—especially maize-based ethanol—is affecting food security. Critical points • Shift towards maize cultivation driven by ethanol demand• Reduction in area under pulses and oilseeds• Increased dependence on edible-oil imports• Higher domestic food-price volatility• Greater vulnerability during supply shocks• Tension between energy self-reliance (ethanol) and food self-reliance Ethanol blending gains (till Aug 2025) • Forex savings: ₹1.44 lakh crore• Crude oil substituted: ~245 lakh tonnes Basics of ethanol • Biofuel (alcohol) used for blending with petrol• Produced via fermentation of biomass (sugar/starch-based)• Blending reduces crude-oil imports and emissions
FRBM Act Review: Centre Flexibility and States’ Fiscal Stress
FRBM Act Fiscal Responsibility and Budget Management Act, 2003 aims to ensure fiscal discipline by:• Reducing fiscal deficit, revenue deficit and public debt• Increasing transparency in fiscal operations• Promoting long-term macroeconomic stability Escape Clause (FRBM) Allows temporary deviation from fiscal targets during severe shocks such as:• National calamity• National security threats• Large structural reforms• Sharp economic slowdown During COVID-19 • Government invoked the escape clause• Significant deviation from FRBM targets due to extraordinary conditions Documents presented with the Budget (FRBM)
UNSC Resolution 2803 and India’s Stand on Gaza Conflict
Context India welcomed recent U.S. moves at the United Nations Security Council (UNSC) to address the Gaza conflict and noted progress under UNSC Resolution 2803. UNSC Resolution 2803 • Adopted: November 2023• Aim:• End Gaza conflict• Create a terror-free, de-radicalised zone• Ensure redevelopment• Coordinate international support• Includes creation of a “Board of Peace” as a transitional administration India’s position on Palestine • First non-Arab country to recognise the State of Palestine (1988)• Supports a sovereign, independent and viable Palestine living in peace with Israel Arab Peace Initiative • Proposed by Saudi Arabia (2002)• Core idea:• Two-state solution• Full normalisation with Israel if it withdraws to pre-1967 borders• East Jerusalem as capital of Palestine
US Iran Nuclear Deal Talks Amid Rising West Asia Tensions
Context The US President warned Iran to return to negotiations for a new nuclear deal, stating that refusal could invite much harsher US military action. Developments • Iran stated it is open to talks but would retaliate strongly if attacked.• Situation raises fears of escalation in West Asia.• Heightened US naval presence amid ongoing tensions over Iran’s nuclear programme.
Index of Industrial Production Grows 7.8%, 26-Month High
Context India’s Index of Industrial Production (IIP) grew 7.8% in December 2025, a 26-month high, driven mainly by manufacturing, electricity, and strong capex-led demand, especially in infrastructure and capital goods. Index of Industrial Production (IIP) • What: Measures short-term changes in industrial output.• Published by: National Statistical Office (NSO), Ministry of Statistics & Programme Implementation.• Frequency: Monthly.• Sectors & weights:• Manufacturing ~77.6%• Mining ~14.4%• Electricity ~8.0%• Current base year: 2011–12• Proposed new base year: 2022–23• Use: Tracks industrial momentum and feeds into GDP estimates. Eight Core Industries • What: Subset of IIP with ~40% weight.• Industries: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilisers, Steel, Cement, Electricity.• Index published by: Ministry of Commerce & Industry (monthly).• Importance: Early signal of infrastructure and industrial activity.
Aadhaar Voter Verification: SC Rejects Forgery Argument
Context The Supreme Court rejected the argument that Aadhaar should be excluded from voter identity verification during the Special Intensive Revision (SIR), stating that forgery risk applies to all documents, including passports, and cannot be a ground to drop Aadhaar. Aadhaar • What: Aadhaar is a 12-digit unique identity number issued by UIDAI.• Legal basis: Aadhaar Act, 2016.• Purpose: Proof of identity, not proof of citizenship or domicile.• Eligibility: Residents of India (including foreigners residing for 182 days or more).• Use: Identity verification for welfare delivery, services, and governance efficiency.• Safeguard: Cannot be used as conclusive proof of citizenship (Section 9).• Key point (SC): Possibility of forgery is not a valid reason to exclude Aadhaar from verification processes.
President’s Address Parliament: Centre Seeks Apology Over Protests
Context During the President’s Address to a joint sitting of Parliament at the start of the Budget Session, Opposition protests were termed a breach of parliamentary decorum, prompting the Centre to demand an apology. Relevant Constitutional Articles (Presidential Address & role) • Article 87: President addresses both Houses jointly at the commencement of the first session each year and after a general election; outlines government policy.• Article 86(1): President has the right to address Parliament and send messages to either House.• Article 85: President summons, prorogues Parliament and can dissolve Lok Sabha (on aid and advice).• Article 74: President acts on the aid and advice of the Council of Ministers; the Address reflects the government’s agenda, not personal views.• Rules of Procedure / Parliamentary conventions: President’s Address is a solemn constitutional occasion; disruptions are seen as disrespect to the office and a breach of decorum.
US Fed Policy Rate Kept Unchanged Amid Elevated Inflation
Context The US Federal Reserve has kept interest rates unchanged due to sticky inflation and strong economic activity. Impact on Indian Economy
