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 2030-31 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 similar trends 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 2.10% in June 2025 against 5.08% in June 2024.
- Services PMI increased to 61.1 in July 2025 as compared to 60.4 in June 2025.
- The consumption of petroleum products during FY26 (April-June 2025) stood at 61.837 MMT in volume terms.
- Quick Estimates for India’s Index of Industrial Production (IIP) for May 2025 stood at 156.6 against 154.7 in May 2024.
- The combined index of eight core industries stood at 166.7 for FY26 (April-June) compared to 164.5 for FY25 (April-June). For the month of June 2025, the combined index of eight core industries stood at 166.5.
- Cargo traffic handled at major ports stood at 220.04 million tonnes (MMT) during FY26 (April-June).
- Railway freight traffic stood at 1.6 billion tonnes during FY25, making it the third largest freight handling railway system in the world.
- In June 2025, the number of e-way bills increased to 11.94 crore, representing a significant rise of 19.3% compared to June 2024.
- The gross GST (Goods and Services Tax) revenue collection stood at Rs. 1,84,597 crore (US$ 21.38 billion) in June 2025.
- As of July 23, 2025, the Indian basket of crude oil stood at Rs. 6,082 (US$ 70.38) a barrel, increasing from June 2025, which was Rs. 6,054 (US$ 69.78).
- In May 2025, UPI volume stood at 14,006.48 million transactions worth Rs. 18,41,801 crore (US$ 213.27 billion).
- India’s merchandise exports in June 2025 were estimated at Rs. 3,03,469 crore (US$ 35.14 billion).
- Merchandise imports in June 2025 were estimated at Rs. 4,65,653 crore (US$ 53.92 billion).
- The average daily net injection under the liquidity adjustment facility (LAF) stood at Rs. 47,294 crore (US$ 5.50 billion) as on March 16, 2025.
- In FY26, as of July 11, 2025, foreign exchange reserves in India stood at Rs. 59,78,149 crore (US$ 692.56 billion).
- As of July 11, 2025, the currency in circulation (CIC) registered Rs. 37,86,479 crore (US$ 438.45 billion).
- Rupee strength reached Rs. 86.37/US$ as of July 23, 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. 1,84,83,098 crore (US$ 2.14 trillion) as of June 27, 2025.
- Credit to non-food industries stood at Rs. 1,84,18,709 crore (US$ 2.13 trillion) as of June 27, 2025.
India's headline annual retail inflation fell from 2.82% in May to 2.10% in June 2025, primarily driven by a significant decline in food prices, which turned negative at -1.06%. This marks the lowest headline CPI since January 2019. India’s job market rebounded in May 2025 with an 8.9% rise in listings after eight months of decline, led by strong hiring in childcare (27%), personal care and home health (25%), education (24%), and manufacturing (22%), according to Indeed.
During June 2025, private equity (PE) and venture capital (VC) investments stood at Rs. 14,681 crore (US$ 1.7 billion). Whereas, during Q2 2025 (April-June), private equity (PE) and venture capital (VC) investments stood at Rs. 45,771 crore (US$ 5.3 billion) across 248 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 June 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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