December 31, 2025
Gross Value Added rose 8.1%, driven by strength in industrial and services activity
CPI inflation eased sharply to 0.71% in November 2025, reinforcing price stability
Unemployment fell to 4.7% in November, the lowest level since April, across urban and rural areas
With GDP above US$4.18 trillion, India is now the world’s fourth-largest economy with a strong growth outlook
India is on course to conclude 2025 as one of its strongest years of economic performance, with macroeconomic indicators signalling robust growth, subdued inflation, rising exports and improving labour market conditions, according to the government’s year-end economic review released through the Press Information Bureau.
The review noted that real Gross Domestic Product expanded by 8.2% in the second quarter of FY 2025-26, a six-quarter high that underlined the resilience of domestic demand despite a challenging global trade environment. This followed growth of 7.8% in the first quarter and 7.4% in the fourth quarter of FY 2024-25, pointing to sustained economic momentum.
Domestic production also strengthened during the period. Real Gross Value Added grew by 8.1% in the second quarter of FY 2025-26, supported by buoyant industrial activity and continued expansion in services. The government said the trend reflected a broad-based upturn across key sectors of the economy.
Inflation conditions remained largely benign through the year. Consumer Price Index inflation eased steadily from 4.26% in January 2025 to 0.71% in November, providing the Reserve Bank of India with policy space to maintain a supportive monetary stance. Wholesale Price Index inflation also moderated, reinforcing overall price stability.
Labour market indicators showed a marked improvement. The unemployment rate declined to 4.7% in November 2025 from 5.2% in October, the lowest level since April, with both urban and rural areas contributing to the decline. Labour force participation and worker participation rates also recorded encouraging gains.
Export performance strengthened throughout the year. Merchandise exports rose to US$38.13 billion in November from US$36.43 billion in January, while services exports continued to post solid growth, driven by strong global demand for Indian software and business services. External sector resilience was further supported by robust foreign exchange reserves, steady remittance inflows and improved current account dynamics.
The government said the convergence of strong domestic demand, structural reforms, supportive monetary conditions, and stable prices had created a favourable macroeconomic environment marked by both high growth and low inflation. With GDP exceeding US$4.18 trillion, India has emerged as the world’s fourth-largest economy. It is expected to climb further in global rankings over the coming years, with projections indicating sustained expansion through 2026 and beyond.
Source: Economic Times