India Maintains Growth Crown as Global Risks Multiply

India has once again underscored its economic resilience, emerging stronger in an increasingly volatile global environment to retain its position as the fastest-growing major economy. At a time when geopolitical tensions, trade disruptions and financial fragilities are unsettling markets worldwide, India’s growth story has taken an unexpected but decisive upward turn.

According to the Economic Survey of India 2025-26, tabled in Parliament on Thursday, India’s real GDP growth has not only withstood global headwinds but has actually accelerated, defying widespread pessimism following the imposition of steep tariffs by the United States under former President Donald Trump.

Post the announcement of a 50 percent tariff regime on Indian exports, several global and domestic economists revised India’s growth forecasts downward, bracing for a slowdown. Instead, the opposite unfolded.

“In reality, growth accelerated due to a slew of structural reforms and policy measures,” the Economic Survey notes.
“Fast forward five months, and India is now anticipating a full-year real growth rate of over 7%, with another year of real growth at or near 7%.”

This performance firmly cements India’s standing as the fastest-growing major economy, even as many advanced and emerging economies struggle to maintain momentum.

India: A Paradox of Strength in a Fragile World

Yet, the Survey highlights a striking paradox. India’s strongest macroeconomic performance in decades is unfolding in a global system that no longer reliably rewards sound fundamentals with currency stability, capital inflows or strategic insulation.

While global growth and trade have so far proven more resilient than expected, uncertainty looms large over how long this trend can hold. The Survey cautions that the full impact of ongoing political and economic disruptions may surface with a delay.

“Fragility, uncertainty and episodic shocks are increasingly structural features of the system,” it warns, pointing to intensifying geopolitical rivalries, an increasingly complex security environment in Europe, and rising financial vulnerabilities linked to highly leveraged technology investments.

Trade policy, the Survey observes, is no longer driven primarily by efficiency or multilateral norms. Instead, national security and political considerations are rapidly reshaping global commerce, making the system less predictable and more risk-prone.

Three Possible Global Economic Scenarios for 2026

Against this backdrop, the Economic Survey of India outlines three potential scenarios for the global economy in 2026—each carrying distinct implications for India’s growth trajectory.

Scenario 1: Managed Fragility (40–45% Probability)

In the best-case scenario, the global economy in 2026 largely mirrors 2025—functional but fragile.

Minor shocks could trigger outsized reactions as financial stress, trade frictions and geopolitical flare-ups demand frequent government intervention. This would be a world of “managed disorder,” where economies remain interconnected but increasingly distrustful.

The Survey notes that elevated readings of the Global Economic Policy Uncertainty Index reflect persistent fear, even in the absence of systemic collapse.

Scenario 2: Multipolar Breakdown (40–45% Probability)

In this scenario, global fragmentation deepens significantly. Strategic rivalry intensifies, the Russia–Ukraine conflict remains unresolved, and collective security frameworks weaken.

Trade becomes overtly coercive, sanctions proliferate, and supply chains are reshaped by political pressure rather than economic logic. Financial shocks, the Survey warns, would travel faster across borders due to weakened institutional buffers.

The risks are compounded by vulnerabilities in the global technology sector. The Survey flags concerns over massive off-balance-sheet investments in artificial intelligence infrastructure and growing skepticism around the economics of large language models.

A correction in these leveraged bets, coupled with warning signs such as rising Japanese government bond yields, could send shockwaves through global markets.

Scenario 3: Systemic Shock Cascade (10–20% Probability)

The bleakest scenario involves a convergence of financial, technological and geopolitical crises.

Highly leveraged AI investments, dependent on optimistic growth assumptions, could unravel and tighten global financial conditions. If such a correction coincides with geopolitical escalation or major trade disruptions, it could trigger a sharp contraction in liquidity and capital flows.

“While this remains a lower-probability scenario, its consequences would be significantly asymmetric,” the Survey cautions, warning that the fallout could exceed the severity of the 2008 global financial crisis.