In a challenging global economic environment, India’s economy stands out as a symbol of growth and stability. According to the United Nations’ World Economic Situation and Prospects update for 2025, released on May 18, 2025, India is projected to achieve a 6.3 per cent growth rate, making it the fastest-growing large economy. This remarkable performance is driven by resilient domestic demand and strategic government investments, despite global challenges like trade tensions and policy uncertainties.
Economic Growth Projections
Sustained Growth Amid Global Slowdown
India’s GDP growth for 2025 is estimated at 6.3 per cent, slightly lower than earlier projections, with a forecasted increase to 6.4 per cent in 2026. In contrast, the global economy is expected to grow at a modest 2.4 per cent. The strength of domestic consumption and public spending has been pivotal in maintaining employment stability and fueling India’s economic momentum.
| Year | GDP Growth Rate | Global Growth Rate |
|---|---|---|
| 2025 | 6.3% | 2.4% |
| 2026 | 6.4% | - |
Capital Markets Performance
A Surge in Investor Participation
By December 2024, India’s capital markets achieved record highs, outperforming many emerging markets. Retail investor participation skyrocketed from 4.9 crore in FY20 to 13.2 crore. The primary market saw a 32.1 per cent increase in IPOs, with capital raised nearly tripling compared to the previous year, reflecting strong investor confidence.
Manufacturing Sector Growth
A Pillar of Economic Stability
The manufacturing sector has demonstrated consistent growth, with the Gross Value Added rising steadily over the past decade. Supported by domestic demand and effective policy interventions, manufacturing’s share of GDP has remained stable, underscoring its role as a key driver of India’s economy.
Record Export Performance
Global Competitiveness
In 2024-25, India’s exports reached an all-time high of USD 824.9 billion, a 6.01 per cent increase from the previous year. Services exports led this growth, while merchandise exports also recorded significant gains, highlighting India’s expanding manufacturing capabilities.
Defence Sector Advancements
A Step Towards Self-Reliance
The defence sector has undergone transformational growth, with a surge in indigenous production and defence exports. Government initiatives focused on self-reliance have positioned India as a credible global supplier in the defence industry.
Inflation and Employment
Balancing Stability and Inclusivity
Inflation is projected to decline to 4.3 per cent in 2025, staying within the Reserve Bank of India’s target range. Unemployment levels have remained stable, though gender disparities in employment highlight the need for more inclusive workforce policies.
Global Economic Context
Navigating a Fragile Landscape
The UN report highlights a fragile global economy, with rising trade tensions and policy uncertainties. Potential US tariff increases could disrupt global supply chains and raise production costs. Emerging economies face similar challenges, making India’s resilient growth even more significant.
Key Highlights
- India’s economy to grow at 6.3% in 2025, the fastest among large economies.
- Capital markets hit record highs, with retail investors rising to 13.2 crore.
- Exports reached USD 824.9 billion in 2024-25, driven by services and merchandise.
- Manufacturing and defence sectors show robust growth, supported by policy reforms.
- Inflation projected at 4.3% in 2025, with stable employment levels.
- Global economy faces trade tensions and policy uncertainties.