India retains fastest growing economy tag with 6.5% GDP surge in FY25

India has recorded a robust 6.5 per cent GDP growth in fiscal 2025 (FY25), maintaining its position as the fastest growing major economy amid global economic uncertainties. The Reserve Bank of India (RBI) expects the same growth rate to continue in fiscal 2026 (FY26).

Over the past decade, India’s economic size has expanded sharply, nearly tripling from ₹106.57 lakh crore (~$1.24 trillion) in FY15 to an estimated ₹331.03 lakh crore (~$3.85 trillion) in FY25. In the past year alone, nominal GDP increased by 9.9 per cent, while real GDP rose by 6.5 per cent.

Inflation cooled to 2.82 per cent in May 2025—the lowest since February 2019. According to RBI’s Financial Stability Report released in June 2025, the outlook for inflation remains favourable, the risk of imported inflation appears low amid weak global demand. Crude oil and commodity prices are expected to remain in check, although recent tensions in the Middle East have introduced some uncertainty.

Exports surged to a record ~$824.9 billion in FY25, up 6.01 per cent from the previous year. This marks a sharp rise from $466.22 billion in fiscal 2014 (FY14), underlining a decade of sustained export momentum. Over the past decade, the country has steadily expanded its footprint in global trade, driven by stronger industrial capacity, rising competitiveness in services, and the emergence of high-value sectors.

India’s foreign exchange reserves reached ~$697.9 billion, enough to cover over 11 months of imports. Meanwhile, the current account deficit was restricted to just 0.6 per cent of GDP, and quarter four (Q4) recorded a surplus of ~$13.5 billion.

Foreign direct investment also showed strength, rising 14 per cent to ~$81.04 billion. This is more than double the $36.05 billion received in FY14, showing long-term progress. The services and manufacturing sectors led the inflows.

“In this global milieu, the Indian economy remains a key driver of global growth. Growth momentum is buoyed by strong domestic growth drivers, sound macroeconomic fundamentals and prudent policies,” Sanjay Malhotra, RBI Governor said in a release.

ALCHEMPro News Desk (HU)