India set to end 2025 on strong economic footing with high growth, low inflation: Govt
India is heading towards the end of 2025 on a notably strong economic note, with high growth, cooling inflation, improving jobs data and resilient exports coming together in what the government has described as a rare “Goldilocks moment” for the economy.
In its year-end economic review released via the Press Information Bureau (PIB), the government said key macroeconomic indicators point to one of India’s most impressive economic performances in recent years, despite a challenging global trade environment.
Growth hits a six-quarter high
The headline number grabbing attention is GDP growth. India’s real Gross Domestic Product (GDP) expanded by 8.2 per cent in the second quarter of FY 2025–26, the fastest pace in six quarters. This follows a steady growth trend of 7.8 per cent in Q1 FY26 and 7.4 per cent in Q4 FY25, underlining strong domestic demand and economic resilience.
Adding to the positive picture, real Gross Value Added (GVA), a key measure of actual production, grew 8.1 per cent in Q2, powered by robust performance in both the industrial and services sectors. The government said this points to a broad-based recovery rather than growth being driven by just one or two sectors.
Inflation cools, easing pressure on households
Perhaps the most striking shift in 2025 has been on the inflation front. Consumer Price Index (CPI) inflation softened sharply, falling from 4.26 per cent in January 2025 to just 0.71 per cent by November. Wholesale Price Index (WPI) inflation also moderated during the year.
This sustained decline in prices has eased cost pressures on households and given the Reserve Bank of India (RBI) room to maintain a supportive monetary policy stance, the review noted.
Job market shows steady improvement
The labour market also showed encouraging signs as the year progressed. Unemployment dropped to 4.7 per cent in November 2025, down from 5.2 per cent in October, marking the lowest level since April 2025. The improvement was seen across both urban and rural areas.
Labour force participation and worker participation rates also moved higher, signalling that more people are not just looking for work, but finding it.
Exports and external sector remain resilient
India’s export story gained momentum through 2025. Merchandise exports rose to USD 38.13 billion in November, compared with USD 36.43 billion in January. Services exports continued to be a major strength, driven by strong global demand for Indian software, business services and other tradable services.
The external sector remained stable, supported by healthy foreign exchange reserves, strong remittance inflows and improved current account dynamics. Together, these helped cushion India against global volatility.
A “Goldilocks moment” for the economy
Summing up the year, the government said the combination of strong domestic demand, structural reforms, low inflation and supportive monetary conditions has created an ideal growth environment.
With India’s GDP now exceeding USD 4.18 trillion, the country has become the world’s fourth-largest economy. Projections from both Indian and global institutions suggest this growth momentum could continue through 2026 and beyond, as the government reiterates its focus on reforms and inclusive growth.
FAQs
Because the economy is experiencing high growth without high inflation, creating a balanced and supportive environment for both businesses and consumers.
India recorded 8.2 per cent GDP growth in Q2 FY26, the highest in six quarters, following solid growth in previous quarters.
Better supply conditions, easing global price pressures and stable domestic demand helped CPI inflation fall significantly through the year.
Yes. Unemployment dropped to 4.7 per cent in November 2025, with gains seen in both urban and rural areas, along with higher participation rates.
It reflects India’s rising global economic influence and strengthens its ability to attract investment, boost trade and sustain long-term growth.
