Economic Survey 2025–26 Draws from Ramayana, Warns India of Shifting Global Order and China’s Strategic Economic Push

New Delhi:
The Economic Survey 2025–26 has invoked the Yuddha Kand of the Ramayana to underline a crucial policy message for India — the need to learn strategically from adversaries without compromising national autonomy.

Using the epic as a metaphor, the Survey refers to Lord Rama’s willingness to seek knowledge even from a defeated enemy, emphasizing that wisdom can be selectively adopted without absorbing values or systems that weaken self-reliance. The reference is presented as a framework for navigating today’s increasingly complex and uncertain global economic environment.

The Survey notes that the international order is undergoing deep structural changes marked by rising geopolitical tensions, volatile financial conditions, and the gradual erosion of long-held assumptions about globalization.

China’s Hainan Free Trade Port in Focus

A key development highlighted in the Survey is China’s launch of the Hainan Free Trade Port (FTP), which became fully operational across the island by the end of 2025. Under the new system, Hainan functions as a low-tariff, services-driven economic zone with a customs regime separate from mainland China.

Imports into the island attract minimal tariffs, while goods manufactured locally with sufficient value addition can be sold across China without additional duties. The Survey describes this not merely as a competitive challenge, but as a structural transformation capable of reshaping Asia’s trade routes, logistics networks, and investment flows — particularly in the northern Indian Ocean and South China Sea regions.

A Broader Warning for India

The Survey cautions that such developments are unfolding against a fragile global backdrop. Although the world economy absorbed the shocks of 2025 better than expected, the era of “business as usual” is effectively over.

It warns that across economies, financial markets, and political systems, the probability of medium-to-severe disruptions has now become higher than the likelihood of a smooth continuation of past trends.

For India, this instability carries tangible implications. As a country dependent on global capital flows, the Survey stresses the importance of maintaining strong liquidity positions and robust external buffers. It also flags rising risks related to capital outflows, including the growing global use of US dollar-linked stablecoins.

While India remains relatively well positioned to sustain growth compared to many economies, its continued dependence on external sources for critical inputs such as capital, energy, and fertilizers is expected to test its economic flexibility.

A Long Phase of Global Uncertainty Ahead

Looking ahead, the Survey draws a historical parallel, suggesting that the period leading up to 2045 could resemble the inter-war years of the 20th century — marked by geopolitical uncertainty, economic fragmentation, and social stress in advanced economies.

History shows that such phases can also generate innovation and industrial expansion, the Survey notes, but only when policy responses are proactive rather than defensive.

A Fundamentally Different Global Economy

The Survey emphasizes that today’s global economic environment is fundamentally different from previous phases of globalization. Trade, technology, finance, and supply chains are no longer governed primarily by efficiency and interdependence. Instead, they are increasingly shaped by strategic considerations.

China’s evolving trade strategy is cited as a key example of this shift. Trade is now being used not as a reciprocal arrangement but as a transitional policy tool — characterized by aggressive exports combined with reduced reliance on foreign suppliers. This creates what the Survey describes as “asymmetric openness,” where some economies remain broadly open while others retain the ability to restrict access at relatively lower domestic cost.

In such a world, building resilience becomes a long-term national project. The Survey concludes that institutional strength, strategic capability, credible rule enforcement, competitive enterprises, and a norm-abiding citizenry will determine outcomes. Policymakers, it adds, must carefully navigate the inevitable trade-offs between speed and patience, protection and competition, and autonomy and integration.