India’s Economic Survey Highlights Strong Financial Resilience Amid Challenges
The Economic Survey 2025-26, presented in Parliament by Union Finance Minister Smt. Nirmala Sitharaman, emphasizes India’s steady performance in equity markets despite ongoing trade policy changes and geopolitical uncertainties. Key government measures, including personal income tax cuts and an overhaul of the Goods and Services Tax (GST), have fostered a supportive environment for domestic investors, driving a resilient market landscape during the financial year.
Growth in Equity Markets
Between April and December 2025, India’s equity indices, Nifty 50 and BSE Sensex, enjoyed gains of approximately 11.1% and 10.1%, respectively. The primary market remained robust, leading globally in initial public offering (IPO) activities. Notably, IPO volumes surged by 20% compared to the previous year, with funds raised increasing by 10% in the same period. A significant trend was the rise of Offer for Sale (OFS) transactions, allowing existing shareholders to sell stakes instead of companies issuing new shares.
Encouraging SME Participation
The small and medium enterprises (SME) sector also saw a rise in listings, jumping from 190 in FY25 to 217 in FY26 by December. Fund mobilization increased from ₹7,453 crore to ₹9,635 crore, showcasing the growing sophistication of India’s capital markets and the active participation of emerging enterprises.
The Economic Survey points to the Securities Markets Code, 2025, which aims to enhance the regulatory framework governing securities. This new legislation focuses on board composition, transparency, investor protection, and governance, placing market infrastructure institutions under a formal statutory framework.
Rising Retail Investor Engagement
During the fiscal year 2026, 23.5 million new demat accounts were opened, elevating the total to over 216 million, with women representing nearly a quarter of new investors. The mutual fund sector also witnessed growth, with unique investors reaching 5.9 crore by December 2025, largely from smaller urban areas. This growing engagement highlights the importance of equity investments, which have become a central part of household financial wealth over the years.
The Securities and Exchange Board of India (SEBI) implemented various initiatives to bolster market integrity and investor protection. New regulations, effective from October 1, 2025, have streamlined processes for collecting investor funds. Furthermore, the framework has been updated to enable more efficient operations for stock brokers in the GIFT International Financial Services Centre.
Strengthening of Debt Markets
India’s corporate bond market has experienced remarkable growth, with outstanding issuances rising from ₹17.5 trillion in FY15 to ₹53.6 trillion in FY25, averaging a 12% annual growth rate. The corporate bond sector is now a vital component of the country’s GDP, capturing 15-16%. In the current fiscal year, the debt market has accounted for over 63% of total resource mobilization.
Foreign Portfolio Investment (FPI) patterns have shown fluctuations, with net selling of equities amidst buying in debt instruments. SEBI’s relaxed investment norms for FPIs and ongoing trade discussions with the US offer a promising outlook for FPI inflows into India’s debt sector.
Domestic Institutional Investors as Stabilizers
Domestic institutional investors have played a crucial role in stabilizing the markets during periods of foreign investment outflows. Their ownership within NSE-listed equities reached 18.7% by September 2025. For the first time in Q4 FY25, DIIs surpassed foreign institutional investors regarding value of holdings.
GIFT City has made significant strides, with over 1,034 entities registered and increasing its position in the Global Financial Centres Index. This progress is attributed to a robust regulatory framework supporting innovation and fintech partnerships.
Looking Ahead
The Economic Survey underscores India’s ambition to achieve a developed economy status by mid-century through strategic financial reforms. The commitment to advancing long-term capital markets will be essential for sustaining economic growth, with regulatory measures continuing to enhance investor confidence and market efficiency.
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