India enters ‘Goldilocks moment’ with high growth and low inflation

Government data shows India’s economy crossed USD 4.18 trillion in 2025, supported by stable prices, job gains and export growth

PGurus Newsdesk

December 30, 2025

India’s 2025 economic performance signals sustained momentum

India set to end 2025 on strong economic footing: Government review

India is on course to conclude 2025 as one of its strongest economic years in recent times, with key macroeconomic indicators pointing to robust growth, easing inflation, rising exports and improving labour market conditions, according to the government’s year-end economic review.

In a press note issued by the Press Information Bureau, the government said India’s real Gross Domestic Product (GDP) grew by 8.2 per cent in the second quarter of the financial year 2025–26, marking a six-quarter high. The performance highlights resilient domestic demand despite a challenging global trade environment. GDP growth stood at 7.8 per cent in the first quarter of FY26 and 7.4 per cent in the fourth quarter of FY25.

The review noted that real Gross Value Added (GVA), which reflects domestic production activity, expanded by 8.1 per cent in the second quarter of FY26, driven by sustained momentum in both the industrial and services sectors. The broad-based expansion indicates a strengthening of economic activity across major segments of the economy.

Inflation remained largely under control throughout the year. Consumer Price Index (CPI) inflation eased steadily from 4.26 per cent in January 2025 to 0.71 per cent in November, providing policy space for the Reserve Bank of India to maintain a supportive monetary stance. Wholesale Price Index (WPI) inflation also moderated over the same period, reinforcing the overall price stability environment.

Labour market conditions showed notable improvement. The unemployment rate declined to 4.7 per cent in November 2025 from 5.2 per cent in October, marking the lowest level since April. The decline was observed across both urban and rural areas, while labour force participation and worker participation rates also recorded encouraging gains.

India’s external sector performance strengthened during the year, with merchandise exports rising to USD 38.13 billion in November from USD 36.43 billion in January. Services exports continued to grow steadily, reflecting rising global demand for Indian software, business services and other tradable services, and reinforcing India’s expanding role in global value chains.

The review also highlighted resilience in the external sector, supported by strong foreign exchange reserves and improved current account dynamics. Robust remittance inflows and services export earnings helped moderate the current account deficit.

The government described the current economic phase as a “Goldilocks moment”, marked by a rare combination of high growth and low inflation. It attributed the performance to strong domestic demand, structural reforms, stable prices and supportive monetary conditions.

With India’s GDP now exceeding USD 4.18 trillion, the country has emerged as the world’s fourth-largest economy. Projections from domestic and international institutions indicate that the growth momentum is likely to continue through 2026 and beyond. The government reaffirmed its commitment to reforms aimed at sustaining growth while ensuring broader and more inclusive development.

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