Current Affairs - Economy

The International Monetary Fund (IMF) has revised India’s GDP growth forecast upward to 6.4% for both 2025 and 2026. This update reflects improved global financial conditions, a weaker US dollar, and reduced trade pressures due to lower-than-expected global tariffs. These favourable external factors, combined with India’s strong domestic demand and economic reforms, have positioned it as the fastest-growing major economy in the world. The IMF’s projection, calculated on a calendar year basis, indicates a resilient economic trajectory for India despite global uncertainties, reinforcing its attractiveness as a destination for foreign investment and a model of emerging market stability.

In May 2025, India witnessed a staggering 98% year-on-year decline in net Foreign Direct Investment (FDI) inflows, dropping to just $35 million from over $2 billion in May 2024. This significant fall was driven by a sharp increase in repatriation by foreign investors and a drop in gross inflows. Despite the downturn, India’s economic resilience is evident from its strong foreign exchange reserves of $696.7 billion, which provide more than 11 months of import cover and cover 95% of external debt. The situation highlights the volatility of global capital flows and the importance of maintaining macroeconomic stability.

According to the United Nations Conference on Trade and Development (UNCTAD) report titled “Trade and Development Foresights 2025: Under Pressure – Uncertainty Reshapes Global Economic Prospects,” global economic growth is expected to slow down to 2.3% in 2025. The report reviews the impact of financial uncertainty, trade tensions, and development challenges on the global economy. This lower growth forecast reflects concerns over rising geopolitical instability, inflation, and weaker demand in key economies. It highlights the need for stronger multilateral cooperation and strategic economic planning to navigate an increasingly complex global landscape.

India has been ranked 4th among the world’s most equal societies by the World Bank, based on the Gini Index. With a score of 25.5, India follows only the Slovak Republic (24.1), Slovenia (24.3), and Belarus (24.4), which means India is ahead of most countries globally in terms of income and wealth equality. The Gini Index is a standard economic measure of inequality, where a lower value signifies a more equal distribution. This ranking reflects significant progress in economic inclusivity and income distribution within India, positioning it as a leading example among developing nations striving for social and economic equity.

In 2024, India became the fourth-largest consumer of biofuels globally, surpassing China, as reported in the Statistical Review of World Energy 2025. India's biofuel usage rose by 40% from the previous year, reaching 77 thousand barrels of oil equivalent per day. Although India still lags behind in biofuel production compared to China, this milestone highlights the country's commitment to clean energy and reducing carbon emissions. Biofuels such as ethanol and biodiesel, which are derived from renewable sources, play a crucial role in achieving sustainability in the transport and industrial sectors. This ranking underscores India’s growing leadership in green energy adoption.