Amid a world fraught with persistent geopolitical tensions, rising trade protectionism, and tariff uncertainties, India has navigated global headwinds with remarkable resilience while sustaining an impressive growth trajectory. The IMF’s World Economic Outlook (July 2025) revised India’s GDP growth forecast upward to 6.4 per cent for both 2025 and 2026 by 0.2 and 0.1 percentage points, respectively, reaffirming the country’s position as the world’s fastest-growing major economy. This upgrade underscores India’s capacity to sustain robust momentum despite mounting global challenges.
As per MoSPI’s estimates, the Indian economy grew by 6.5 per cent in FY25. While this marks a moderation from 8.8 per cent average growth achieved over the past three years, the performance remains impressive against a turbulent global backdrop. India’s growth in FY25 has been underpinned by strong domestic consumption, which accelerated to 7.2 per cent from 5.6 per cent in the previous year. A key driver of this surge has been robust rural demand, supported by a buoyant agricultural sector. Favourable monsoon boosted agricultural output and bolstered rural incomes, lifting consumption while keeping the inflation benign. Thus, the combination of strong consumption and robust agricultural performance has emerged as a critical pillar of India’s growth momentum, despite moderation witnessed in manufacturing growth. The services sector has also provided impetus to the economic growth, with exports remaining robust even as merchandise exports softened due to weak global demand.
Looking ahead, the outlook for the Indian economy in FY26 remains strong. A good monsoon and healthy kharif sowing are expected to keep inflation anchored and consumption buoyant. India also maintains critical buffers in the form of robust services exports and healthy foreign exchange reserves, which provide insulation against global volatility. On the policy front, proactive government measures, including recent announcements of GST 2.0 reforms and formation of a task force for carrying out next-generation reforms, are set to enhance ease of doing business, simplify compliance, and stimulate private consumption and investment. These strengths will continue to reinforce India’s growth trajectory even in the face of global uncertainties. This will lend strength to India’s growth trajectory over the medium-term as well.
Amid a world fraught with persistent geopolitical tensions, rising trade protectionism, and tariff uncertainties, India has navigated global headwinds with remarkable resilience while sustaining an impressive growth trajectory. The IMF’s World Economic Outlook (July 2025) revised India’s GDP growth forecast upward to 6.4 per cent for both 2025 and 2026 by 0.2 and 0.1 percentage points, respectively, reaffirming the country’s position as the world’s fastest-growing major economy. This upgrade underscores India’s capacity to sustain robust momentum despite mounting global challenges.
As per MoSPI’s estimates, the Indian economy grew by 6.5 per cent in FY25. While this marks a moderation from 8.8 per cent average growth achieved over the past three years, the performance remains impressive against a turbulent global backdrop. India’s growth in FY25 has been underpinned by strong domestic consumption, which accelerated to 7.2 per cent from 5.6 per cent in the ...