A Crucial Year for India's Economic Growth

Key Chapter Title List

1. Growth, Stability, Confidence: The "Three Pillars" of the Indian Economy
2. Growth Momentum Strengthens
3. Unemployment Rate Continues to Decline
4. Both Labor Force Participation and Worker Population Ratio Rise
5. Inflationary Pressure Eases
6. Trade Performance Improves
7. External Sector Demonstrates Resilience
8. Broad-Based Momentum Consolidates India's Growth Story

Document Introduction

This report provides a systematic assessment of India's macroeconomic performance in FY2025 (particularly the first half of FY2025-26), based on official materials released by the Press Information Bureau of India on December 29, 2025. The report notes that India is experiencing a rare "Goldilocks moment," characterized by high growth coexisting with low inflation, which lays a crucial foundation for achieving its long-term goal of becoming a high-income country by 2047. Against the backdrop of persistent global economic uncertainty, India, driven by robust endogenous momentum and effective policy adjustments, demonstrates significant resilience and growth vitality.

The core analysis of the report revolves around four pillars: growth, employment, inflation, and trade. In terms of growth, the real GDP year-on-year growth rate reached 8.2% in Q2 of FY2025-26, hitting a six-quarter high, and the Reserve Bank has revised its full-year growth forecast upward to 7.3%. This momentum is primarily driven by strong domestic private consumption, front-loaded government capital expenditure, Goods and Services Tax (GST) reforms, and favorable financial conditions. Multiple international institutions, including the International Monetary Fund, have also concurrently raised their growth expectations for India, widely believing it will maintain the fastest growth rate among G20 nations in the coming years.

The simultaneous improvement in the job market is a key indicator of healthy economic growth. The report details the Periodic Labour Force Survey data, showing that the overall unemployment rate dropped to 4.7% in November 2025, the lowest level since April of that year. Concurrently, the Labor Force Participation Rate and the Worker Population Ratio have continued to rise, with significant improvement particularly in female and rural employment conditions. This indicates that economic growth is effectively translating into more inclusive employment opportunities, which is crucial for a country with a large young population.

The significant moderation in the inflation environment has provided room for policymaking. The Consumer Price Index inflation rate fell sharply from 4.26% in January 2025 to 0.71% in November, remaining near the lower bound of the Reserve Bank of India's 2%-6% target range for most of the year. The Wholesale Price Index even recorded negative growth in November. This benign inflation environment enabled the central bank to cut the policy repo rate by 25 basis points to 5.25%, aiming to support growth momentum while maintaining price stability.

The external sector demonstrated resilience in 2025. Despite global trade challenges, merchandise exports grew steadily from USD 36.43 billion in January to USD 38.13 billion in November, with key categories like engineering goods, electronics, and pharmaceuticals making significant contributions. Service exports remained robust, and coupled with growth in remittance income, helped narrow the current account deficit. Meanwhile, foreign exchange reserves were maintained at a high level of USD 686.2 billion, providing a solid buffer. Foreign Direct Investment also showed significant growth momentum in the first half of FY2025-26.

In summary, this report concludes that the Indian economy achieved a synergistic strengthening of internal growth drivers and external balance in 2025. Sound macroeconomic fundamentals, ongoing structural reforms, and a favorable demographic structure collectively form the core support for its steady progress towards the 2047 development goal. The report's content is entirely based on official statistical data and policy documents released by various Indian government ministries and the central bank, providing authoritative and timely first-hand analytical material for studying India's current economic situation and trends.