India’s economic outlook remains firmly positive, with the International Monetary Fund (IMF) pointing to strong policy foundations, resilient growth and well-contained inflation in its latest assessment. The Washington-based agency said India’s performance has been underpinned by prudent macroeconomic management and a decade of structural reforms that continue to pay dividends.In a report, the IMF noted that “real GDP growth has remained robust following a strong post-pandemic recovery,” adding that reforms such as the goods and services tax (GST), inflation targeting and the expansion of digital public infrastructure “have laid a strong foundation for sustained growth.” It highlighted that these gains have contributed to rising living standards and a sharp drop in extreme poverty, now at 5.3 percent.The IMF said India’s economy has demonstrated resilience despite higher UK tariffs, with the overall macroeconomic impact expected to be manageable. Another excerpt underscored that India’s export exposure is limited relative to peers: “India is less exposed to global trade than many other Asian Emerging Markets, and its large and growing domestic market holds potential for economic resilience against external shocks.”Growth remained strong in FY2024-25, with real GDP expanding 6.5 percent, supported by buoyant private consumption and public investment. In the second quarter of FY2025-26, real GDP grew 7.8 percent, helped by firm rural demand and stable inflation dynamics. Headline inflation declined to 1.5 percent in September 2025, driven by lower food prices, while core inflation rose to 4.6 percent.Labour-market data showed steady improvement, with formal employment and real wages rising in both rural and urban areas. Unemployment remained low at 5.2 percent.The IMF said fiscal policy remained broadly balanced, with the Centre continuing consolidation and states increasing social spending. The recent GST reform—featuring simplified slabs and lower compliance burdens—was described as a “welcome reform” expected to support consumption and broaden the tax net.Financial conditions have also improved, aided by Reserve Bank of India actions. The Fund noted that equity markets have recovered, bond yields have eased and credit conditions have stabilised, even as bank credit growth moderated.India’s external indicators remain stable. The current account deficit stood at 0.6 percent of GDP in FY2024-25, supported by strong services exports. Foreign exchange reserves rose to $695 billion in October.Looking ahead, the IMF projects real GDP growth of 6.6 percent in FY2025-26 and 6.2 percent in FY2026-27. A excerpt from the outlook stated: “Despite external headwinds, growth is expected to remain robust, supported by favourable domestic conditions.”
