India Economy Projected to Grow Around 7.4% in 2025
India’s economy is projected to expand by around 7.4% in 2025, maintaining its position as the fastest-growing major economy. The growth outlook is supported by strong domestic demand, sustained government spending, and policy measures aimed at supporting economic activity amid global uncertainty.
The projection reflects confidence in India’s macroeconomic stability and the impact of recent reforms. Improved tax compliance and rationalisation measures have strengthened government finances, allowing continued focus on capital expenditure. At the same time, accommodative monetary policy conditions have helped support credit availability for businesses and households.
Role of Reforms and Policy Support
Tax reforms have played a key role in boosting formalisation and widening the tax base, which has improved fiscal resilience. Monetary policy easing has complemented these efforts by lowering borrowing costs and encouraging private investment. Together, these measures have helped maintain momentum across manufacturing and services sectors.
Public investment, particularly in infrastructure such as roads, railways, energy, and digital connectivity, continues to act as a major growth driver. These investments are also expected to crowd in private capital and improve long-term productivity.
Domestic Demand Remains Strong
Household consumption remains a critical pillar of growth, supported by improving employment conditions and steady urban demand. Services activity, including trade, transport, and financial services, has shown resilience and continues to contribute significantly to overall economic output.
While external demand faces pressure from global slowdown risks and trade-related challenges, India’s relatively large domestic market provides a buffer against external shocks.
Medium-Term Outlook and Risks
Looking ahead, economic growth is expected to moderate slightly in 2026 but remain well above the global average. External risks such as geopolitical tensions and slower growth in key markets could affect exports, but policy continuity and internal demand are expected to limit the impact.
Overall, India’s growth outlook remains robust, anchored by reforms, public investment, and domestic consumption.
