India’s economy posted a robust 7.8% growth in the April–June quarter of FY26, outpacing expectations and strengthening its position as the world’s fastest-growing major economy. This marks a sharp improvement from 6.5% in the same period last year and pushes India closer to its ambition of becoming the third-largest economy by 2030 with a projected GDP of $7.3 trillion.
Sectoral Drivers of Growth
The services sector led the charge, expanding by 9.3%, while manufacturing and construction also delivered strong results with 7.7% and 7.6% growth respectively. Agriculture, forestry, and mining recorded 3.7% growth, up significantly from 1.5% a year earlier.
“These numbers reflect the resilience and momentum of the economy, built on strong macro fundamentals,” said Economic Affairs Secretary Anuradha Thakur.
Industrial and Consumption Boost
The Index of Industrial Production (IIP) rose to 3.5% in July 2025, supported by manufacturing in basic metals and electrical equipment.
- Capital expenditure for FY25 reached ₹10.52 lakh crore.
- Private consumption grew 7%, aided by a rebound in rural demand.
- Government spending surged 9.7%, adding further momentum.
Inflation at Multi-Year Low
Inflation eased sharply, with CPI inflation at 1.55% in July 2025, the lowest since June 2017. Food prices fell by -1.76%, boosting household purchasing power. With inflation remaining within the RBI’s 2-6% target band for three straight quarters, the flexible inflation-targeting framework is proving effective.
Job Creation and Labour Market Gains
India added over 17 crore jobs in the past decade. The labour force participation rate rose to 60.1%, with women’s participation nearly doubling. The unemployment rate dropped to 3.2%, while youth unemployment fell below the global average. Rural job creation surged, while services remained the dominant source of urban employment.
Investment and Reforms
- FDI inflows reached $81 billion in FY25, taking cumulative inflows since 2000 to $1.05 trillion.
- Equity inflows rose 27% year-on-year (Apr–Dec 2024).
- Forex reserves touched $695.5 billion.
The GST ecosystem now has 1.52 crore active registrations, with a growing share of women-led enterprises. Upcoming reforms in October 2025 will focus on easing MSME compliance and lowering taxes on essentials.
Global Recognition
- IMF projects India’s growth at 6.4% in 2025–26.
- S&P Global upgraded India’s sovereign rating after 18 years.
- Fitch Ratings reaffirmed a stable outlook at BBB-.
Flagship Initiatives Fuel Structural Growth
Government programs such as PLI, Digital India, PMJDY, and Make in India continue to reshape the economic landscape:
- PLI attracted ₹1.76 lakh crore in investments.
- Internet users crossed 97 crore.
- 56 crore bank accounts were opened under PMJDY, with 55% held by women.
- India became the second-largest mobile phone manufacturer globally.
With private investment, public infrastructure spending, and stable inflation, India’s medium-term outlook remains strong, aligning with the government’s vision of Viksit Bharat 2047 — a self-reliant, developed, and globally competitive nation.
