Current Affairs - Economy

ICRA has forecasted India’s GDP growth for FY2025–26 at 6.2%, indicating a slight moderation from the 6.5% growth recorded in the previous fiscal year. The dip is attributed primarily to weaker global trade conditions and a slowdown in merchandise exports. Despite these external challenges, strong rural demand, higher capital expenditure by the government, and fiscal support measures are expected to maintain economic momentum. The projection plays a crucial role in shaping fiscal policy, investment strategies, and economic planning for the year, as it reflects the balancing act between global headwinds and domestic resilience.

The unemployment rate in India rose from 5.1% in April 2025 to 5.6% in May 2025, according to the Periodic Labour Force Survey (PLFS). This increase indicates a concerning trend in joblessness, particularly impacting youth and women across both urban and rural areas. The PLFS data is critical as it provides a comprehensive look at labour trends across demographics and regions. The rise also comes alongside a decline in the Labour Force Participation Rate to 54.8%, suggesting fewer people are either working or actively seeking jobs.

In May 2025, India’s wholesale price inflation (WPI) dropped to 0.39%, marking a significant decline from 0.85% in April. This easing was primarily attributed to substantial deflation in food prices, especially vegetables, which saw a drop of over 21%. The slowdown was also influenced by reduced prices of fuel and manufactured goods. This figure represents the lowest wholesale inflation rate in over a year and reflects a broader disinflationary trend, which is also evident in retail inflation numbers. This data is important for shaping economic and fiscal strategies, especially in managing input costs and consumer pricing trends.

In May 2025, India recorded a Consumer Price Index (CPI) inflation rate of 2.82%, marking the lowest point since February 2019. This significant drop reflects a broader trend of easing inflation across most Indian states, although some like Kerala, Punjab, and Jammu & Kashmir continued to see elevated price levels. The decline in inflation could be attributed to various macroeconomic factors including stable commodity prices, improved supply chain conditions, and effective monetary policies. Such a low inflation rate is significant for the economy as it suggests increasing price stability, which can influence interest rates, purchasing power, and overall economic planning.

The World Bank has maintained its GDP growth projection for India at 6.3% for FY2025–26, despite downgrading forecasts for 70% of global economies due to trade tensions and weak investment. India remains the fastest-growing major economy, supported by strong domestic demand, a resilient services sector, and moderating inflation. The RBI's monetary policy easing and expected fiscal consolidation further bolster this outlook. While global growth is projected at just 2.3%—the slowest since 2008 (excluding recessions)—India's steady performance highlights its economic resilience amid worldwide challenges.