Indian Economy

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 1.54% in September 2025 against 5.49% in September 2024.
• India's Services PMI stood at 60.9 in September 2025, as compared to 57.7 in September 2024, representing strengthening in the services sector.
• The consumption of petroleum products during FY26 (April-September 2025) stood at 118,295 MMT in volume terms.
• Quick Estimates for India’s Index of India’s Index of Industrial Production (IIP) for August 2025 stood at 151.7 against 145.8 in August 2024.
• The combined index of eight core industries stood at 166.0 for FY26 (April-September) compared to 161.3 for FY25 (April-September). For the month of September 2025, the combined index of eight core industries stood at 160.1.
• Cargo traffic handled at major ports stood at 437.43 million tonnes (MMT) during FY26 (April- September).
• Railway freight traffic stood at 1.6 billion tonnes during FY25, making it the third largest freight handling railway system in the world.
• In September 2025, the number of e-way bills reached a record high of 132 million, marking a 21.1% YoY increase.
• The gross GST (Goods and Services Tax) revenue collection stood at Rs. 1,89,017 crore (US$ 21.56 billion) in September 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 October 24, 2025, UPI volume stood at 14,519.12 million transactions worth Rs. 19,51,101 crore (US$ 222.50 billion).
• India’s merchandise exports in September 2025 were estimated at US$ 36.38 billion.
• Merchandise imports in September 2025 were estimated at US$ 68.53 billion.
• The average daily net injection under the liquidity adjustment facility (LAF) stood at Rs. 55,949 crore (US$ 6.38 billion) as on October 19, 2025.
• In FY26, as on October 17, 2025, foreign exchange reserves in India stood at Rs. 61,77,971 crore (US$ 704.52 billion).
• As of October 10, 2025, the currency in circulation (CIC) registered Rs. 37,69,351 crore (US$ 429.85 billion).
• Rupee strength reached Rs. 87.80/US$ as of October 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. 1,92,66,107 crore (US$ 2.20 trillion) as of October 03, 2025.
  • Credit to non-food industries stood at Rs. 1,92,23,447 crore (US$ 2.19 trillion) as of October 03, 2025.

India’s retail inflation eased to 1.54% in September 2025, the lowest in over eight years, from 2.07% in August and below RBI’s 2-6% target range. Food inflation plunged to -2.28%, with rural food inflation at -2.17% and urban at -2.47%. Key drivers for the drop included falling prices of vegetables, meat, fish, eggs, oils & fats, and personal care items. 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 rose slightly to 5.2% in September from 5.1% in August, mainly due to rural unemployment rising from 4.3% to 4.6% and urban unemployment from 6.7% to 6.8%. Rural male unemployment edged up to 4.7%, urban male to 6.0%. Female labour force participation hit 34.1%, the highest since May, with rural female Labour Force Participation Rate (LFPR) rising from 35.2% in June to 37.9% in September. Female Worker Population Ratio increased from 30.2% to 32.3%, with rural female WPR rising from 33.6% to 36.3%. Despite the rise in unemployment, the employment rate reached 52.4%, and overall LFPR climbed to 55.3%, a five-month high. India’s white-collar job market in September 2025 grew 17% YoY and 4% MoM. 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 hires made up 45% of new jobs, showing high demand for fresh talent. Non-metro regions outperformed metros, driven by logistics, healthcare, and retail expansion.

During January-September 2025, private equity (PE) and venture capital (VC) investments stood at US$ 26 billion across 1,363 deals compared to 1,170 deals in CY24.

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.