India Enjoys ‘Goldilocks Moment’ in 2025 with High Growth, Low Inflation
Robust GDP expansion, easing inflation, and improving employment signal strong economic momentum, say policymakers
New Delhi, Dec 30 : India closed 2025 on a strong macroeconomic footing, characterised by accelerating economic growth, easing inflation, and improving employment indicators, signalling a rare “Goldilocks period,” according to government officials.
International institutions have echoed the optimism. The IMF, World Bank, OECD, Moody’s, Fitch, and the Asian Development Bank have either upgraded or maintained robust growth projections for India over the next two years, reinforcing its status as the world’s fastest-growing major economy.
India’s real gross domestic product (GDP) grew 8.2 per cent in Q2 of FY 2025–26, a six quarter high, up from 7.8 per cent in the previous quarter and 7.4 per cent in Q4 of FY 2024–25. Growth was led by resilient domestic demand, with industrial and services sectors driving expansion. Real gross value added (GVA) rose by 8.1 per cent over the same period.
Reflecting this momentum, the Reserve Bank of India (RBI) revised its GDP forecast for FY 2025–26 to 7.3 per cent, citing strong consumption, government capital expenditure, tax rationalisation, and supportive financial conditions.
Employment indicators also improved. The unemployment rate declined to 4.7 per cent in November, the lowest since April, down from 5.2 per cent in October. The reduction was particularly pronounced among women in urban and rural areas, indicating broader labour market inclusion. Labour force participation and worker population ratios reached multi-month highs, reflecting stronger workforce engagement.
Inflation remained benign throughout 2025. Consumer Price Index (CPI) inflation eased from 4.26 per cent in January to 0.71 per cent in November, briefly touching historic lows of 0.25 per cent in October. The moderation was largely driven by declining food prices and stable core inflation. With inflation well within its target band, the RBI cut the policy repo rate by 25 basis points to 5.25 per cent, maintaining a neutral stance to support growth and price stability.
India’s external sector also strengthened. Merchandise exports rose from US$ 36.43 billion in January to US$ 38.13 billion in November, led by engineering goods, electronics, pharmaceuticals, and petroleum products. Services exports grew 8.65 per cent during April–November 2025, reflecting India’s global competitiveness. Foreign exchange reserves stood at US$ 686.2 billion in late November, providing more than 11 months of import cover.
The current account deficit narrowed to 1.3 per cent of GDP in Q2 of FY 2025–26, supported by strong remittances and services exports.
Policymakers said the convergence of high growth, low inflation, and improving employment sets India firmly on track to achieve its long-term goal of attaining high middle-income status by 2047.
