Chief Economic Adviser V. Anantha Nageswaran, addresses a press conference after tabling of Economic Survey 2025-26 in Parliament at the National Media Centre, in New Delhi on January 29, 2026.
| Photo Credit: ANI
The Economic Survey of India 2025-26 flagged concerns of correction in the AI segment coupled with geopolitical tensions, to spill over to global financial markets.
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The Chief Economic Advisor V Anantha Nageswaran wrote that increasing global uncertainties could play out in three possible ways, the worst case scenario would be a correction in AI-segment occurring along with the geo-political tension.
“The recent phase of highly leveraged AI-infrastructure investment has exposed business models that are dependent on optimistic execution timelines, narrow customer concentration, and long duration capital commitments. A correction in this segment would not end technological adoption, but it could tighten financial conditions, trigger risk aversion and spill over into broader capital markets,” the CEA wrote.
Further, the coincidence of such a risk with geo-political tension would mean “sharper contraction in liquidity, a sudden weakening of capital flows, and a shift toward defensive economic responses across regions,” which would lead to macroeconomic consequences worse than the global financial crisis in 2008, the CEA wrote in the survey. The chance of such a consequential risk unfolding is however just between 10% to 20%, Mr. Nageswaran wrote in the survey report.
The other two scenarios are not extremely optimistic either. The best case scenario he said would be “business as 2025.”
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In this, scenario which he estimated is a 40% to 45% probability, financial stress will not collapse the systems but will need government intervention to stabilise the market volatility. The other probability, which is also a maximum of 45% chance, strategic rivalry intensifies, the Russia–Ukraine conflict remains unresolved in a destabilising form, and collective security arrangements unravel. This would make trade more coercive using tariffs and would call for realigning supply chains due to political pressures. There would be lesser headroom for shock absorption and minor tremors might have larger effects.
The CEA said that India’s “strong macroeconomic fundamentals do not guarantee insulation” from these risks.
The risks and the probabilities of it unfolding becomes important in the context of increase in Indian retail investor population, which the Economic Survey says is a sign of financial development. The number of unique investors crossed 12 crore in September 2025, said CEA Anantha Nageswaran calling it a “key milestone.”
The SIP route to participate in the capital markets has also led to domestic institutional investors like mutual funds, stepping to compensate the foreign investor exodus from Indian stock market.While this is a sign of financial broadening, the new retail investors are facing the risks that Mr. Nageswaran underlined at the outset of the document.
Published – January 29, 2026 07:15 pm IST
