India Set to End 2025 on Strong Economic Footing with High Growth, Low Inflation
India is poised to finish 2025 with remarkable economic achievements, demonstrating a blend of high growth and low inflation. The government attributes this positive outlook to a combination of factors that have culminated in what analysts refer to as a Goldilocks moment for the economy.
Key Economic Indicators for 2025
– Real GDP Growth: India’s real Gross Domestic Product (GDP) surged by 8.2% in the second quarter of FY 2025-26, achieving a six-quarter high. This growth reflects resilient domestic demand, despite challenges in the global trade landscape. Previous growth rates included 7.8% in Q1 and 7.4% in Q4 of FY 2024-25.
– Gross Value Added (GVA): The real GVA, which measures domestic production, increased by 8.1% in Q2 of 2025-26, driven by buoyant activity in the industrial and services sectors.
– Inflation Trends: The Consumer Price Index (CPI) inflation steadily declined from 4.26% in January 2025 to a mere 0.71% in November 2025. This moderation provides the Reserve Bank of India (RBI) the flexibility to maintain conducive monetary policies. The Wholesale Price Index (WPI) inflation followed suit, contributing to the stable pricing environment.
– Employment Dynamics: November 2025 saw an unemployment rate drop to 4.7%, down from 5.2% in October, marking the lowest level since April 2025. Both urban and rural sectors contributed to this positive trend, along with rising labor force and worker participation rates.
– Export Performance: Merchandise exports reached USD 38.13 billion in November 2025, up from USD 36.43 billion in January. Services exports also thrived, bolstered by India’s growing presence in global value chains, particularly in sectors such as software and business services.
– Foreign Trade and Resilience: Robust foreign exchange reserves and improved current account dynamics further reinforced external sector stability. Strong remittances helped balance the current account deficit alongside healthy services export receipts.
The government emphasizes that this remarkable economic performance is the result of strong domestic demand, essential structural reforms, supportive monetary conditions, and a stable pricing landscape.
Looking Forward
With a GDP value exceeding USD 4.18 trillion, India has solidified its position as the world’s fourth-largest economy. Projections from both domestic and international institutions predict continued economic expansion, affirming India’s potential for sustained growth leading into 2026 and beyond. The government remains committed to implementing structural reforms and policy measures that aim to uphold economic momentum and foster inclusive growth.
Conclusion
As India approaches the end of 2025, it stands on a formidable economic foundation characterized by high growth and low inflation. The convergence of various favorable factors has set the stage for continued prosperity, underlining the nation’s resilience and potential in the evolving global economy.