VOIWORLD/DESK
India is the fastest-growing economy today. The Reserve Bank of India estimates the Gross Domestic Product (GDP) growth to continue at a rate of 6.5% in the upcoming year. The United Nations and the Confederation of the Indian Industry have calculated similar percentages as well. This phenomenal growth can be attributed to factors such as record foreign exchange reserves, a manageable current account deficit, increasing foreign investment, strong domestic demand, low inflation rates as down as 2.8%, robust capital markets, etc. Over the last decade the GDP at current prices has tripled, expected to reach ₹331.03 lakh crore by 2025.
The year-on-year inflation rates, including food prices, have relaxed, and based on the Consumer Price Index (CPI) stood at 2.82% in May 2025, the lowest level recorded since February 2019; giving relief to both households and businesses. Looking forward, inflation rates are expected to remain stable. Food prices should continue to be favourable because of robust crop production. On a global level, the risk of imported inflation seems low for the time being along with a slowdown in global demand that would likely regulate the prices of crude oil and other commodities. Although, tensions in the Middle East do add some uncertainty to this futuristic picture. The RBI believes that inflation will stay within its medium-term target of 4 per cent or under which could be seen as preliminary evidence that the current price stability is not temporary, but part of a broader pattern of economic
stability for India.
Despite both global and domestic uncertainties, the Indian capital market maintained strong performance by December 2024. It outperformed other emerging economies that signifies the trust investors have in India’s growth story. Retail participation has risen sharply with the number of investors jumped from 4.9 crore to 13.2 crore over the last 5 years. The stock market is now seen as a way to build wealth for large companies and ordinary citizens. There was a 32.1% rise in 2024 compared to the previous year in the primary market, where companies raise funds by selling shares to the public. The money raised from the Initial Public Offerings almost tripled, reaching ₹1,53,987 crore. As a result, India’s share in global IPO listings rose from 17 per cent in 2023 to 30 per cent in 2024, which was the highest in the world.
India’s external sector also provides growing international confidence in India’s capabilities to deal with global uncertainties. India continues to be a top choice for global investors because of its investor-friendly Foreign Direct Investment (FDI) policy that allows 100% foreign ownership in most sectors via the automatic route. Consequently, FDI inflows rose to a (provisional) USD 81.04 billion in FY 2024–25, a 14% increase from the year before. FDI into the services sector grew by 40.77 per cent, reaching USD 9.35 billion from USD 6.64 billion in the previous year. Followed by the manufacturing segment where the FDI grew by 18 per cent.
India’s foreign exchange reserves stood at USD 697.9 billion as of 20 June 2025 which is enough to cover almost a year worth of goods imports, acting as a safety net in times of global shocks. External debt remains at a moderate level, accounting for 19.1 per cent of the GDP as of March 2025.
According to these numbers, India’s financial position in relevance to the world is healthy and stable. India’s current account balance recorded a surplus of USD 13.5 billion (1.3% of GDP) in the fourth quarter of 2024–25, highlighting the growing strength of India’s export earnings and the stability of foreign inflows. In the same financial year (FY), the current account deficit was only 0.6 per cent of GDP due to strong services exports and steady remittances from Indians living abroad.
Over the past decade, the country has steadily expanded its footprint in global trade with the help of stronger industrial capacity, greater competitiveness in services, and the rise of strategic sectors like defence production and electronics.
India’s total exports touched a new high of USD 824.9 billion in 2024–25, a growth of 6.01% from 2023–24, underlining a decade of sustained export momentum compared to USD 466.22 billion in 2013–14. Services exports have remained a key contributor throughout the years. The strong and consistent growth in services exports proves that India can deliver high-quality services to global clients in sectors like IT, finance, etc. Merchandise exports (excluding petroleum products) also achieved a record by reaching USD 374.1 billion which is the highest non-petroleum merchandise export figure ever recorded. The credit for this growth can be attributed to sectors like machinery, chemicals, defence equipment, etc. Per the Ministry of Statistics and Programme Implementation, while the sector’s share in the economy remained stable at around 17.3 per cent, the Gross Value Added (GVA) of manufacturing at constant prices witnessed a nearly twofold rise from ₹15.6 lakh
crore in 2013-14 to ₹27.5 lakh crore in 2023–24, marking its expanding base.
Overall, India’s economic performance over the past year reflects a deep sense of stability and direction. With real GDP rising at 6.5 per cent and inflation reaching its lowest in years, the country has successfully balanced expansion with price stability. Despite external risks, India’s fundamentals are sound. As the world economy faces a “precarious moment”, India’s thriving performance offers reassurance in its growth prospects.
