India’s Economic Survey for 2025–26 has delivered a message ahead of the Union Budget: a failure in heavily leveraged artificial intelligence infrastructure could trigger a global financial shock on the scale of, or even worse than, the 2008 crisis.

While the survey assigns a relatively low probability, between 10 and 20%, to such an event, it stresses that the consequences would be “significantly asymmetric,” with ripple effects across financial markets, capital flows and the real economy. The warning reflects growing unease among policymakers about how the global AI boom is being financed and where the risks ultimately sit.

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The risk at the core: an emerging ‘AI debt bomb’

Central to the survey’s concern is what it describes as an emerging “AI debt bomb”. Drawing on a report by the Financial Times, it highlights how global technology firms have moved more than $120 billion in data centre investments off their balance sheets. These projects are being financed through special purpose vehicles (SPVs), largely backed by Wall Street investors.

The structure, the survey notes, bears uncomfortable similarities to the opaque and highly leveraged financing mechanisms that magnified losses during the 2008 global financial crisis.

“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,” the survey observes.

Put simply, the economics hold only if demand scales rapidly, customers remain few but committed, and funding conditions stay the same, assumptions that leave little room for error.

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Three possible global paths in 2026

The survey outlines three broad scenarios for the global economy in 2026.

The most probable outcome, with a 40–45% likelihood, is a continuation of the current environment: persistent volatility, trade frictions and frequent policy interventions, but no full-blown systemic crisis.

An equally likely second scenario envisions a disorderly shift toward a multipolar world, marked by heightened geopolitical rivalry, coercive trade practices, expanding sanctions regimes and weaker global shock absorbers.

The third scenario, though assigned a lower probability of 10–20%, carries the highest risks.

When finance, technology and geopolitics collide

In this tail-risk scenario, financial stress triggered by a correction in AI infrastructure investment converges with geopolitical escalation or major trade disruptions. Such an interaction, the Survey warns, could sharply tighten global liquidity, disrupt capital flows and push economies into defensive policy postures.

“A correction in this segment would not end technological adoption,” the survey notes, “but it could tighten financial conditions, trigger risk aversion and spill over into broader capital markets.”

It is this combination, leveraged technology bets, geopolitical instability and a fragile trading system, that could turn a sectoral correction into a crisis rivalling, or exceeding, the damage seen in 2008.

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Early warning signs are already visible

The survey points to several indicators suggesting that markets are already pricing in heightened fragility.

Gold prices surged through 2025, reflecting a mix of geopolitical uncertainty, expectations of negative real interest rates and growing concern over financial tail risks. The sharp rise in Japanese government bond yields is also flagged as a sign of strain in the global financial system.

Trade policy, meanwhile, is increasingly shaped by security considerations rather than efficiency or multilateral rules, reducing the margin for error when shocks occur.

Why India may be better positioned

Despite the darkening global outlook, the survey argues that India enters this phase from a position of relative resilience. Stronger macroeconomic fundamentals, robust domestic demand and limited exposure to highly leveraged AI financing structures provide a degree of insulation against worst-case scenarios.

That relative strength, the survey suggests, may prove critical if global risks crystallise faster than expected.