Introduction
India has consistently demonstrated robust economic growth, emerging as one of the fastest-growing major economies globally. India is now the world’s fourth-largest economy and is projected to become the third largest by 2030 with a GDP of US$ 7.3 trillion. This transformation stems from a decade of focused governance, structural reforms, and strengthened global positioning. Backed by strong domestic demand, favourable demographics, and sustained policy reforms, India continues to enhance its global footprint in trade, investment, and innovation. Over the past decade, India’s GDP at current prices has surged from US$ 1.23 trillion in FY15 to an estimated US$ 3.82 trillion in FY25, tripling in just ten years. In FY25, India's nominal GDP grew by 9.9% and real GDP by 6.5%, with quarterly GDP growth in Q4 FY25 at 7.4%, and a projected real GDP growth range of 6.4% to 6.7% expected in FY26, indicating sustained economic momentum. This trajectory is underpinned by macroeconomic stability, a resilient external sector, narrowing fiscal deficit, easing inflation, and high consumption expenditure. Additionally, improving employment prospects and the government’s focus on long-term structural reforms are expected to play a key role in sustaining growth.
Moreover, export performance has experienced remarkable growth over the past decade, reflecting the increasing credibility and demand for Indian products in the global marketplace. India’s total exports have shown remarkable growth over the past decade, rising from US$ 468 billion in FY14 to US$ 825 billion in FY25, marking a substantial increase of approximately 76%. Additionally, India's share of world merchandise exports also improved, rising from 1.66% to 1.81%, advancing the country from 20th to 17th position globally. The demographic transition, marked by a lower infant mortality rate and a consistent growth in literacy rates, further enhances India's advantageous position. With improved income distribution, heightened employment rates, and globally competitive social amenity provisions, there is potential for India's per capita GDP to expand in the next 25 years, mirroring the growth seen in the preceding 75 years.
In the Union Budget 2025-26, the government proposed to increase allocation for capital expenditure to Rs. 11.21 lakh crore (US$ 129.0 billion), up 10.1% from revised budget estimate of Rs. 10.18 lakh crore (US$ 117.2 billion) in FY25.
In FY25, the following key indicators highlighted improved performances:
- Private Final Consumption Expenditure (PFCE) is projected to grow by 7.2% in FY25 over the growth rate of 5.6% in FY24.
- According to the third advance estimates, India’s foodgrain production in FY25 is projected at 3,539.59 LMT, marking an increase of 216.61 LMT over FY24’s output of 3,322.98 LMT, an approximate growth of 6.5%.
- Consumer Price Index (CPI): Combined inflation was 1.55% in July 2025 against 3.60% in July 2024.
- Services PMI increased to 65.2 in August 2025 as compared to 61.1 in July 2025.
- The consumption of petroleum products during FY26 (April-July 2025) stood at 81.080 MMT in volume terms.
- Quick Estimates for India’s Index of Industrial Production (IIP) for June 2025 stood at 153.3 against 151.0 in June 2024.
- The combined index of eight core industries stood at 166.7 for FY26 (April-July) compared to 164.1 for FY25 (April-July). For the month of July 2025, the combined index of eight core industries stood at 166.1.
- Cargo traffic handled at major ports stood at 292.91 million tonnes (MMT) during FY26 (April-July).
- Railway freight traffic stood at 1.6 billion tonnes during FY25, making it the third largest freight handling railway system in the world.
- In July 2025, the number of e-way bills reached a record high of 104.86 million, marking a 19.2% increase YoY and a 4.7% rise sequentially, representing a nine-month high for annual growth.
- The gross GST (Goods and Services Tax) revenue collection stood at Rs. 1,95,735 crore (US$ 22.39 billion) in July 2025.
- As of August 25, 2025, the Indian basket of crude oil stood at US$ 69.03 a barrel, increasing from June 2025, which was US$ 70.38.
- In August 2025, UPI volume stood at 13,775.68 million transactions worth Rs. 17,51,820 crore (US$ 200.39 billion).
- India’s merchandise exports in July 2025 were estimated at US$ 37.24 billion.
- Merchandise imports in July 2025 were estimated at US$ 64.59 billion.
- The average daily net injection under the liquidity adjustment facility (LAF) stood at Rs. 1,20,280 crore (US$ 13.76 billion) as on August 17, 2025.
- In FY26, as on August 15, 2025, foreign exchange reserves in India stood at Rs. 60,86,782 crore (US$ 696.27 billion).
- As of August 08, 2025, the currency in circulation (CIC) registered Rs. 37,77,781 crore (US$ 432.14 billion).
- Rupee strength reached Rs. 87.41/US$ as of August 25, 2025.
- The total foreign direct investment (FDI) equity inflow received by India in FY25 (January-March 2025) amounted to US$ 17.47 billion.
- According to RBI:
- Bank credit stood at Rs. 1,86,06,042 crore (US$ 2.13 trillion) as of August 08, 2025.
- Credit to non-food industries stood at Rs. 1,85,53,760 crore (US$ 2.12 trillion) as of August 08, 2025.
India’s retail inflation in July 2025 eased to an eight-year low of 1.55%, down from 2.1% in June, marking the lowest since June 2017. Food inflation entered deflation at -1.76%, with rural and urban areas recording 1.18% and 2.05% inflation, respectively. Inflation is expected to rise slightly to around 2.0% in August 2025, with the projected average for FY26 average between 3.0-3.2%. India’s job market strengthened in July 2025, with unemployment falling to 5.2% from 5.6% in June, driven by strong rural hiring pre-festival season. Urban unemployment slightly rose to 7.2%. White-collar job listings grew 7% YoY in July 2025, led by hospitality (26%), insurance (22%), education (16%), and oil & gas (13%) sectors. Fresher hiring rose 8%, and professionals with 16+ years’ experience saw a 13% rise. Startups and unicorns recorded double-digit hiring growth.
During H1 2025, private equity (PE) and venture capital (VC) investments stood at US$ 26.4 billion across 593 deals.
According to the Economic Survey 2024-25, from July to November 2024, the government's capital expenditure increased by 8.2%, with the defence, railways, and road transport sectors collectively representing 75% of the total capital outlay.
In addition, steady growth momentum in service activity continues with healthy PMI levels from October 2024 to July 2025, attributing to the growth in output and accommodating demand conditions, leading to a sustained upturn in sales. The growth impetus in rail freight and port traffic remains upbeat, with further improvement in the domestic aviation sector. Strong growth in fuel demand, domestic vehicle sales, and high UPI transactions also reflect healthy demand conditions.
The narrowing merchandise trade deficit and the upward trajectory of net services receipts are anticipated to contribute to an enhancement in India's current account deficit.
The Union Budget 2025-26, themed "Sabka Vikas," focuses on balanced growth across regions. It prioritizes agriculture, MSMEs, investment, and exports as key growth engines. Initiatives include the Prime Minister Dhan-Dhaanya Krishi Yojana for agriculture, support for first-time entrepreneurs, and a push for domestic manufacturing through customs duty rationalization. The budget also emphasises education, healthcare, and infrastructure development, with plans for 50,000 Atal Tinkering Labs and new medical colleges.
In the near future, India’s banking and financial sector is expected to thrive. Despite foreign investors booking profits in the capital market, the outlook remains largely positive for the country. As global conditions stabilise, foreign investors are expected to re-enter the market and capture the upcoming growth wave. The collective efforts invested over the past several years have laid a robust foundation, providing a sturdy platform upon which the framework of a middle-income economy can be built.
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