India’s economy posted a robust 7.8% growth rate in the fourth quarter of 2025, cementing its position as the world’s fastest-growing major economy and surpassing China’s 5.2% for the third consecutive quarter.
The data released by the National Statistical Office on Tuesday showed that broad-based momentum across manufacturing, services, and domestic consumption drove the strong performance. Manufacturing expanded at 9.1%, boosted by the government’s Production Linked Incentive (PLI) scheme which has attracted over ₹2.4 lakh crore in investments since 2021.
Chief Economic Adviser V. Anantha Nageswaran called the numbers ‘extremely encouraging’, noting that India is on track to become the world’s third-largest economy by 2028. The services sector, which contributes 55% of GDP, grew at 8.4%, with IT exports reaching an all-time high of $320 billion in FY25.
Private consumption—the backbone of the Indian economy—rose 7.2%, reflecting rising household incomes and strong urban demand. Rural consumption also bounced back strongly after a two-year slowdown, supported by record kharif output and higher minimum support prices.
The IMF upgraded India’s growth forecast for 2026 to 7.5%, while the World Bank projects continued strong expansion through the decade. Economists, however, cautioned that persistent global headwinds, including elevated energy prices and subdued export demand from Europe, could dampen second-half performance.
