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. India’s nominal GDP grew by 9.8% and real GDP by 6.5% in FY25, reflecting strong domestic demand, investment, and resilient consumer spending. In Q1 of FY26, real GDP surged by 7.8%, achieving the fastest pace in five quarters, beating RBI estimate of 6.5%. This growth was primarily driven by services, manufacturing, and government capital expenditure. Looking ahead to FY26, real GDP growth is projected to range between 6.4% and 6.7%, 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) 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 0.25% in October 2025 against 6.21% in October 2024.
- India's Services PMI stood at 58.9 in October 2025, as compared to 58.5 in October 2024, representing strengthening in the services sector.
- The consumption of petroleum products during FY26 (April-October 2025) stood at 138,958 MMT in volume terms.
- Quick Estimates for India’s Index of India’s Index of Industrial Production (IIP) September 2025 stood at 152.8 against 146.9 in September 2024.
- The combined index of eight core industries stood at 165.6 for FY26 (April-October) compared to 161.5 for FY25 (April-October). For the month of October 2025, the combined index of eight core industries stood at 162.4.
- Cargo traffic handled at major ports stood at 513.80 million tonnes (MMT) during FY26 (April-October).
- Railway freight traffic stood at 1.6 billion tonnes during FY25, making it the third largest freight handling railway system in the world.
- In October 2025, the number of e-way bills reached a record high of 126.85 million, marking an 8.2% YoY increase.
- The gross GST (Goods and Services Tax) revenue collection stood at Rs. 1,95,936 crore (US$ 21.98 billion) in October 2025.
- As of November 11, 2025, the Indian basket of crude oil stood at US$ 64.6 a barrel, increasing from May 2025, which was US$ 64.04.
- As of November 18, 2025, UPI volume stood at 12,412.84 million transactions worth Rs. 16,43,846 crore (US$ 184.37 billion).
- India’s merchandise exports in October 2025 were estimated at US$ 34.38 billion.
- Merchandise imports in October 2025 were estimated at US$ 76.06 billion.
- The average daily net injection under the liquidity adjustment facility (LAF) stood at Rs. 1,09,987 crore (US$ 12.34 billion) as on November 16, 2025.
- In FY26, as on November 14, 2025, foreign exchange reserves in India stood at Rs. 61,46,082 crore (US$ 689.33 billion).
- As of November 14, 2025, the currency in circulation (CIC) registered Rs. 38,09,827 crore (US$ 427.30 billion).
- Rupee strength reached Rs. 89.91/US$ as of November 24, 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. 1,93,90,500 crore (US$ 2.17 trillion) as of October 31, 2025.
- Credit to non-food industries stood at Rs. 1,93,20,128 crore (US$ 2.17 trillion) as of October 03, 2025.
India’s retail inflation plunged to a historic low of 0.25% in October 2025 from a revised 1.44% in September, marking the lowest point in the current CPI series. Driven by deep deflation in food prices (-5.02%), rural food inflation hit -4.85% while urban dropped to -5.18%. This sharp easing reflects GST cuts and favourable base effects, though core inflation rose marginally to 4.33% due to precious metals. The RBI, in its October monetary policy review, lowered its FY26 retail inflation forecast to 2.6%, down from the previous 3.1%. India’s unemployment rate remained steady at 5.2% in October 2025, unchanged from September. Rural unemployment slightly decreased from 4.6% in September to 4.4% in October, while urban unemployment increased from 6.8% to 7.0%. Rural male unemployment saw a marginal dip, while urban male unemployment edged up to 6.1%. Female labour force participation (LFPR) rose to 34.2% in October, the highest since May 2025, driven mainly by rural female participation which increased from 35.2% in June to 37.9% in September and further to approximately 38% in October. Female Worker Population Ratio (WPR) also increased from 30.2% in June to 32.4% in October, with rural female WPR rising from 33.6% to 36.9%. Despite the steady unemployment rate, the employment rate and overall LFPR continued their upward trend, with overall LFPR reaching a six-month high of 55.4% and WPR climbing to 52.5% in October 2025. India’s white-collar job market grew 3% YoY in October 2025, with Diwali-Dussehra holidays briefly slowing overall recruitment momentum. Education, accounting and finance, BPO/ITES, and emerging tech roles such as blockchain and cryptocurrency continued to post robust hiring demand. Tier-II and Tier-III cities led with 21% growth, surpassing 14% in metros. Logistics, healthcare, pharma, IT, e-commerce (up 21%), hospitality (up 24%), and gig roles (up 28%) saw strong hiring. Entry-level hiring stayed strong, with education freshers up 25% and edtech startups’ recruitment surging 77%, led by non-metro growth in logistics, healthcare, retail and tech.
In 3Q 2025, private equity (PE) and venture capital (VC) investments stood at US$ 11.7 billion across 369 deals compared to 331 deals in 3Q 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.
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