The Indian government has declared that 2025 is poised to conclude as one of the nation's most remarkable years for economic performance. A comprehensive year-end review points to a powerful combination of robust growth, stable prices, and improving job prospects, setting the stage for sustained prosperity.
Robust Growth Across Key Sectors
Official data reveals a stellar performance in the second quarter of the financial year 2025-26. The real Gross Domestic Product (GDP) expanded at an impressive 8.2 per cent, marking the highest growth rate in six quarters. This acceleration follows growth of 7.8 per cent in Q1 and 7.4 per cent in Q4 of the previous fiscal year (2024-25).
This momentum is broad-based, driven by strong domestic demand. The real Gross Value Added (GVA), which measures domestic production, grew by 8.1 per cent in Q2 of 2025-26. Both the industrial and services sectors showed significant buoyancy, indicating a healthy and diversified economic upturn.
Inflation Cools, Job Market Heats Up
Complementing the high growth is a remarkably benign inflation trend. The Consumer Price Index (CPI) inflation has softened steadily throughout the year, declining from 4.26 per cent in January 2025 to just 0.71 per cent in November 2025. Wholesale Price Index (WPI) inflation also moderated, creating ample policy space for the Reserve Bank of India to maintain a supportive monetary stance.
The labour market mirrored this positive trend. In a significant improvement, the unemployment rate dropped to 4.7 per cent in November 2025, down from 5.2 per cent in October. This is the lowest jobless rate recorded since April 2025, with both urban and rural areas contributing to the decline. Labour force participation rates also showed encouraging upward movement.
External Sector Strength and Future Outlook
India's integration into the global economy strengthened in 2025. Merchandise exports rose to USD 38.13 billion in November, up from USD 36.43 billion in January. Services exports, a critical pillar, also posted solid growth, reflecting rising global demand for Indian software, business services, and other tradable expertise.
This export resilience, coupled with robust foreign exchange reserves and strong remittance flows, has bolstered the external sector. The government attributes this 'Goldilocks moment'—characterized by high growth and low inflation—to a mix of strong domestic demand, structural reforms, and supportive policies.
With an economy now valued at over USD 4.18 trillion, India stands as the world's fourth-largest economy. Projections from various institutions suggest this expansion will continue into 2026 and beyond. The government has reiterated its commitment to reforms aimed at sustaining this momentum and ensuring that the growth benefits reach all sections of society.
