India closed 2025 on a strong macroeconomic footing, marked by accelerating economic growth, easing inflation and steadily improving employment indicators.
International institutions echoed optimism about India’s outlook. The IMF, World Bank, OECD, Moody’s, Fitch and the Asian Development Bank have either upgraded or maintained strong growth projections for India over the next two years, reinforcing its position as the world’s fastest-growing major economy, the government said in a statement.
With high growth, falling unemployment and easing inflation converging, policymakers described the current macroeconomic environment as a rare “Goldilocks period,” positioning India firmly on track to achieve its long-term goal of attaining high middle-income status by 2047.
India’s real gross domestic product (GDP) grew by 8.2 per cent in the second quarter of FY 2025–26, a six-quarter high, up from 7.8 per cent in the previous quarter and 7.4 per cent in Q4 of FY 2024–25.
The expansion was driven primarily by resilient domestic demand, with the industrial and services sectors leading the growth. Real gross value added (GVA) rose by 8.1 per cent during the same period, the government said.
Reflecting the strengthening momentum, the Reserve Bank of India (RBI) revised its GDP growth forecast for FY 2025–26 upward to 7.3 per cent, citing robust consumption, government capital expenditure, tax rationalisation and supportive financial conditions.
Employment conditions also showed marked improvement during the year. The unemployment rate declined to 4.7 per cent in November 2025, the lowest level since April, down from 5.2 per cent in October.
The decline was particularly pronounced among women, both in urban and rural areas, indicating broader labour market inclusion.
At the same time, labour force participation and worker population ratios reached multi-month highs, signalling stronger workforce engagement, especially in rural areas and among women.
India experienced a benign inflation environment throughout 2025. Consumer Price Index (CPI) inflation eased from 4.26 per cent in January to 0.71 per cent in November, with headline inflation briefly touching historic lows of around 0.25 per cent in October. The moderation was largely driven by declining food prices and stable core inflation.
With inflation comfortably within its target band, the RBI reduced the policy repo rate by 25 basis points to 5.25 per cent, maintaining a neutral stance to balance growth and price stability.
India’s external sector also strengthened during the year. Merchandise exports rose from US$ 36.43 billion in January 2025 to US$ 38.13 billion in November, supported by engineering goods, electronics, pharmaceuticals and petroleum products.
Services exports grew by 8.65 per cent during April–November 2025, underscoring India’s competitiveness in global services trade. Foreign exchange reserves stood at US$ 686.2 billion as of late November, providing over 11 months of import cover.
The current account deficit narrowed to 1.3 per cent of GDP in Q2 of FY 2025–26, aided by strong remittances and services exports.