Current Affairs - Economy

The International Monetary Fund (IMF) projects India’s GDP growth at 6.6% for the fiscal year 2025–26, reflecting strong domestic demand, strategic reforms, and resilience against global economic uncertainties. This comes after a 6.5% growth in FY 2024–25 and a robust 7.8% expansion in Q1 of 2025–26. Key factors supporting this growth include GST reforms, which improve tax compliance and fiscal stability, as well as public infrastructure investment, digital transformation, and formalisation of the economy. Structural reforms in labour, land, education, health, and finance are also expected to sustain long-term growth.

S&P Global Ratings has projected that India will record a GDP growth rate of 6.5% in FY2025-26. This projection reflects confidence in India’s strong domestic consumption, expected tax cuts, and supportive monetary policy, all of which are anticipated to boost demand and investment. The growth forecast positions India as one of the fastest-growing major economies, even amid global challenges such as inflation and geopolitical uncertainties. Additionally, the outlook suggests that internal economic drivers will continue to play a central role in sustaining growth, with potential policy developments like an India–US trade agreement—offering further momentum despite risks like US tariff pressures.

India experienced a significant surge in gold imports in October 2025, reaching $14.72 billion. This sharp rise represented a threefold increase compared with the previous year and was mainly fueled by strong demand during the festival and wedding seasons, periods traditionally associated with higher gold purchases. The unusually high level of imports also played a major role in widening the country’s trade deficit to record levels. Understanding the factors behind this jump provides insight into the interaction between consumer behavior, seasonal trends, and broader economic impacts such as trade imbalances.

ICRA has projected that India’s GDP growth for Q2 FY26 will moderate to 7%, reflecting a slowdown from the stronger 7.8% expansion recorded in Q1. This deceleration is linked to weaker performances in the services and agriculture sectors, despite encouraging industrial output supported by festive demand, GST rate cuts, and inventory stocking. Additional factors contributing to the easing pace include lower government expenditure, moderation in services exports, and weather-related disruptions affecting agricultural yields. Although industry remained a bright spot, the combined drag from services, agriculture, and fiscal trends indicates a softer overall growth outlook for the quarter.

India’s Labour Force Participation Rate (LFPR) for people aged 15 and above reached 55.4% in October, reflecting a sustained rise over four consecutive months. This figure represents the proportion of individuals who are either working or actively seeking work and is measured under the Current Weekly Status (CWS). The improvement highlights growing engagement in the labour market, particularly in rural regions where participation rose to 57.8%. Although urban participation saw a minor dip to 50.5%, the overall national increase signals strengthening economic activity, broader employment opportunities, and a gradual recovery in workforce involvement across different regions and sectors.