Indian Economy

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) has grown 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 was estimated 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 2.07% in August 2025 against 3.65% in August 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-August 2025) stood at 99.660 MMT in volume terms.
• Quick Estimates for India’s Index of Industrial Production (IIP) for July 2025 stood at 155.0 against 149.8 in July 2024.
• The combined index of eight core industries stood at 167.1 for FY26 (April-August) compared to 162.5 for FY25 (April-August). For the month of August 2025, the combined index of eight core industries stood at 166.1.
• Cargo traffic handled at major ports stood at 364.30 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. 1,86,315 crore (US$ 21.12 billion) in August 2025.
• As of September 22, 2025, the Indian basket of crude oil stood at US$ 69.69 a barrel, increasing from May 2025, which was US$ 64.04.
• As of September 21, 2025, UPI volume stood at 9,250.89 million transactions worth Rs. 12,15,733 crore (US$ 137.81 billion).
• India’s merchandise exports in August 2025 were estimated at US$ 35.10 billion.
• Merchandise imports in August 2025 were estimated at US$ 61.59 billion.
• The average daily net injection under the liquidity adjustment facility (LAF) stood at Rs. 1,14,319 crore (US$ 12.96 billion) as on September 14, 2025.
• In FY26, as on September 12, 2025, foreign exchange reserves in India stood at Rs. 62,06,009 crore (US$ 703.47 billion).
• As of September 05, 2025, the currency in circulation (CIC) registered Rs. 37,75,662 crore (US$ 427.98 billion).
• Rupee strength reached Rs. 88.14/US$ as of September 22, 2025.
• The total foreign direct investment (FDI) equity inflow received by India in FY26 (April-June 2025) amounted to US$ 25.17 billion.
• According to RBI:
  • Bank credit stood at Rs. 1,88,00,761 crore (US$ 2.13 trillion) as of September 05, 2025.
  • Credit to non-food industries stood at Rs. 187,55,180 crore (US$ 2.12 trillion) as of September 05, 2025.

In August 2025, India's retail inflation rose to 2.07%, up 46 basis points from July's 1.61%. Food inflation remained negative but improved to -0.69% from -1.76%. Rural inflation increased to 1.69%, and urban inflation to 2.47%. The rise was driven by higher prices in vegetables, meat, fish, oils and fats, personal care items, and eggs. The RBI lowered its FY26 retail inflation forecast to 3.1% from 3.7%, expecting inflation to rise moderately above 4% in the latter part of FY26 and into FY27. India's job market improved in August 2025 with the unemployment rate falling to 5.1% from 5.2% in July, mainly due to a drop in male unemployment. Urban male unemployment eased from 6.6% to 5.9%, and rural male unemployment reached 4.5%, its lowest in months. Female workforce participation rose, with the female worker population ratio increasing to 32% in August from 30.2% in June. White-collar jobs saw a 3% hiring growth YoY in August, with strong gains in insurance (24%), hospitality (22%), education (16%), and oil & gas (7%). AI and machine learning roles surged 54%, freshers hiring increased by 7%, and experienced professionals saw an 8% rise. Startups and unicorns continued double-digit hiring growth.

In July 2025, private equity (PE) and venture capital (VC) investments stood at US$ 4 billion across 115 deals, marking a 32% increase compared to US$ 3 billion across 102 deals in July 2024.

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.