IMF growth projection
India’s Growth Outlook Strengthens for 2025–26: The International Monetary Fund has projected a 6.6% GDP growth for India in FY 2025–26, reaffirming its position among the fastest-growing major economies. This comes after a strong 6.5% expansion in the previous year. The estimate follows India’s 7.8% growth in Q1 of FY 2025–26, highlighting rising economic resilience.
Static GK fact: The IMF was founded in 1944 at the Bretton Woods Conference.
Domestic demand as the driving force
India’s growth trajectory continues to be driven by strong domestic fundamentals. Rising consumption, expanding market activity, and steady improvements in income tax and GST collections are supporting economic momentum. Public infrastructure spending remains a major accelerator for growth.
Static GK Tip: The Budget of India is prepared by the Department of Economic Affairs under the Ministry of Finance.
GST reforms boosting fiscal stability
The IMF noted that India’s ongoing GST reforms are enhancing economic stability at a time of global trade uncertainty. Streamlined compliance, improved tax administration, and better Centre–State coordination have expanded the tax base. These efforts are helping India handle recent trade disruptions, including the 50% tariff increase by the US on selected imports.
Static GK fact: GST was launched in India on 1 July 2017 as the country’s biggest indirect tax reform.
Navigating global economic pressures
Despite global headwinds, India’s economy continues to show resilience. Slowing global trade, geopolitical tensions, and high interest rates in major economies pose challenges, but India’s diversified growth base reduces vulnerability. Digital transformation and economic formalisation are further strengthening the macroeconomic environment.
Strong Q1 performance sets the tone
The robust 7.8% GDP performance in Q1 signals solid momentum for the fiscal year. Services, manufacturing, and infrastructure-related sectors posted strong numbers. If structural challenges such as logistics bottlenecks and skill gaps are addressed, future quarters may perform even better.
Static GK fact: India is currently the world’s fifth-largest economy by nominal GDP.
Structural reforms recommended by IMF
The IMF’s Article IV assessment highlights the need for deeper reforms to elevate India’s long-term potential growth. Key priorities include labour reforms that support job creation, land acquisition improvements for faster project execution, and human capital investments. Strengthening the financial sector is also crucial for expanding credit to MSMEs and supporting entrepreneurship.
Static GK Tip: MSMEs contribute around 30% to India’s GDP.
Long-term outlook remains strong
India’s medium-term outlook remains favourable, driven by a combination of economic reforms, public infrastructure expansion, and rising productivity. Continued policy stability and institutional strengthening will remain critical to sustaining high growth in the years ahead.
Static Usthadian Current Affairs Table
India’s Growth Outlook Strengthens for 2025–26:
| Topic | Detail |
| IMF Growth Projection | India expected to grow at 6.6% in FY 2025–26 |
| Previous FY Growth | 6.5% expansion recorded in FY 2024–25 |
| Q1 GDP Growth | 7.8% growth in Q1 of FY 2025–26 |
| Key Driver | Strong domestic demand and infrastructure push |
| GST Reforms | Improved compliance and tax base expansion |
| External Pressure | 50% US tariff hike on select imports |
| Structural Reforms | Labour, land, education, health, finance |
| Global Risks | Trade slowdown, geopolitical tensions, high global interest rates |
| Economic Strength | Digitalisation and increasing formalisation |
| Financial Sector Need | Greater credit access for MSMEs |
