The International Monetary Fund has delivered a resoundingly positive assessment of India's economic trajectory, highlighting strong policy foundations and resilient growth amid global challenges. The Washington-based institution's latest report underscores how prudent macroeconomic management and structural reforms continue to bear fruit for the South Asian giant.
Robust Growth and Declining Poverty
India's economic performance has been nothing short of impressive, with real GDP growth remaining robust following a strong post-pandemic recovery. The IMF specifically noted that reforms including the goods and services tax (GST), inflation targeting, and the expansion of digital public infrastructure have created a solid foundation for sustained growth.
These economic gains have translated into tangible improvements in living standards for millions of Indians. The report highlighted a sharp drop in extreme poverty, now standing at just 5.3 percent, marking significant progress in the nation's development journey.
Current Economic Indicators Show Strength
The latest data reveals compelling evidence of India's economic vitality. In FY2024-25, real GDP expanded by 6.5 percent, driven by buoyant private consumption and strategic public investment. The momentum continued into FY2025-26, with second-quarter growth reaching 7.8 percent, supported by firm rural demand and stable inflation dynamics.
Inflation control has been particularly noteworthy, with headline inflation declining to 1.5 percent in September 2025, primarily due to lower food prices. Meanwhile, core inflation saw a moderate increase to 4.6 percent.
The labor market has shown steady improvement, with both formal employment and real wages rising across rural and urban areas. Unemployment remained low at 5.2 percent, indicating broad-based economic health.
Structural Reforms and External Resilience
The IMF emphasized that India's economy has demonstrated remarkable resilience despite external challenges, including higher UK tariffs. The overall macroeconomic impact is expected to be manageable, partly because India is less exposed to global trade than many other Asian Emerging Markets.
The country's large and growing domestic market provides a significant buffer against external shocks, positioning India favorably in the global economic landscape. Recent GST reforms, featuring simplified slabs and reduced compliance burdens, were described as a "welcome reform" expected to support consumption and broaden the tax net.
Financial conditions have improved substantially, aided by Reserve Bank of India actions. Equity markets have recovered, bond yields have eased, and credit conditions have stabilized, even as bank credit growth moderated.
External indicators remain stable, with the current account deficit at just 0.6 percent of GDP in FY2024-25, supported by strong services exports. Foreign exchange reserves climbed to $695 billion in October, providing ample cushion against potential volatility.
Positive Outlook Ahead
Looking forward, the IMF projects real GDP growth of 6.6 percent in FY2025-26 and 6.2 percent in FY2026-27. Despite external headwinds, growth is expected to remain robust, supported by favorable domestic conditions that continue to attract global attention.
The comprehensive assessment concludes that India's economic outlook remains firmly positive, with the combination of structural reforms, prudent fiscal management, and digital transformation creating a virtuous cycle of growth and development that benefits all segments of society.
