Global trade and financial systems are entering a phase of heightened fragility as economic decision-making is increasingly shaped by security and political considerations rather than efficiency or multilateral rules, the Economic Survey tabled in Parliament on Thursday warned.
Offering a sobering assessment of the international environment, the survey said the global order is becoming less coordinated, more risk-averse and vulnerable to non-linear shocks, even as headline growth and trade numbers have so far held up better than expected.
This disconnect, it argues, reflects a world where geopolitical competition, trade coercion and financial vulnerabilities have become structural features rather than temporary disruptions.
The survey noted that trade policy across major economies is being weaponised, with tariffs, sanctions and supply-chain realignments driven by strategic imperatives.
“Trade becomes increasingly explicitly coercive, sanctions and counter-measures proliferate, supply chains are realigned under political pressure and financial stress events are transmitted across borders with fewer buffers and weaker institutional shock absorbers,” it said.
India’s own experience during 2025 illustrates this shift. Although the US announced reciprocal tariffs of 25 per cent on India in April, New Delhi was widely expected to secure an early agreement with the US administration.
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The Economic Survey has highlighted strong macroeconomic fundamentals, sustained growth momentum and the expanding role of innovation, entrepreneurship and infrastructure in nation-building. — Narendra Modi, Prime Minister
However, the announcement of an additional penal tariff of 25 per cent on most Indian merchandise exports in August — on top of the earlier levy — came as a surprise, particularly as India had been seen as a potential early beneficiary of the new US tariff regime. Growth forecasts were subsequently revised downward.
Contrary to expectations, the survey said India’s growth accelerated on the back of a series of structural reforms and policy measures. These included the most significant overhaul of the Goods and Services Tax since its launch in 2017, opening up nuclear power generation to private participation, allowing 100 per cent foreign direct investment in insurance, notification of the four labour codes and regulatory easing for industry.
“Indiscriminate quality control orders, which adversely affected downstream industries, were put on hold,” the survey said.
As a result, India is now projected to record real GDP growth of over 7 per cent in the current year, with a similar pace expected next year.
Yet, the survey flagged a key paradox: India’s strongest macroeconomic performance in decades has collided with a global system that no longer rewards economic success with currency stability, capital inflows or strategic insulation, underscoring the growing influence of geopolitics over global economic outcomes.