India's economy shines in a rare Goldilocks moment in 2025, with Q2 GDP surging 8.2%, CPI inflation at historic 0.3% lows, and unemployment at 4.7%. RBI highlights robust demand, GST reforms, and capex driving this high-growth, low-inflation balance, propelling India past Japan to global fourth with USD 4.18T GDP.
India closed 2025 with accelerating GDP growth reaching 8.2% in Q2 FY 2025-26, benign CPI inflation dipping to historic lows of 0.3% in October, and unemployment falling to 4.7% in November. The RBI termed this a rare Goldilocks period of high growth and low inflation, supported by robust domestic demand, GST rationalisation, and favorable monetary conditions. This macroeconomic balance positions India as the world's fastest-growing major economy, surpassing Japan to rank fourth globally with GDP at USD 4.18 trillion.
Key Economic Indicators
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Real GDP grew 8.2% in Q2 FY 2025-26, up from 7.8% prior quarter, with RBI revising FY 2025-26 forecast to 7.3% from 6.8%
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CPI inflation eased from 4.26% in January to 0.71% in November, averaging below RBI's 4% target, projected at 2% for FY 2025-26
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Unemployment rate dropped to 4.7% in November 2025, lowest since April, with rising labour force participation
Growth Drivers And Outlook
Robust private consumption, softer crude prices, and government capex front-loading fueled momentum. Services exports grew 8.65% to USD 270 billion in April-November, forex reserves hit USD 686.2 billion. Global agencies like IMF, OECD upgraded forecasts to 6.6-7.4% for 2025-26 amid resilient external sector
Sources: Press Information Bureau (PIB), The Statesman