Current Affairs - Economy

India secured the sixth position in the Asia Manufacturing Index 2026, placing it in the middle among 11 Asian manufacturing economies. The index evaluates countries on multiple pillars such as economic strength, infrastructure quality, workforce readiness, innovation capacity, and trade environment. India’s ranking reflects steady progress supported by a large domestic market and improving infrastructure, but it also highlights the need for faster reforms and stronger execution. As competition intensifies across Asia, enhancing ease of doing business, logistics efficiency, skills development, and technological adoption will be essential for India to improve its manufacturing competitiveness.

The International Monetary Fund (IMF) has revised India’s 2025 economic growth forecast upward to 7.3%, reflecting stronger-than-expected performance in the third and fourth quarters of 2025. This revision indicates continued robust momentum in India’s economy, supported by technology-led investment and other structural factors. While growth is expected to moderate to 6.4% in 2026–27, India remains a leading contributor among emerging economies. The IMF also noted that inflation is projected to reach target levels in 2025, with global growth remaining steady at 3.3%, highlighting India’s relatively stronger performance in the global context.

India’s overall unemployment rate for individuals aged 15 and above stood at 4.8% in December 2025, slightly higher than November’s 4.7%. While rural unemployment remained steady at 3.9% and urban female joblessness decreased to 9.1%, the overall rate reflects the aggregate of rural and urban employment trends. The Labour Force Participation Rate increased to 56.1%, and the Worker Population Ratio reached a yearly high of 53.4%, indicating a marginal improvement in workforce engagement. These figures provide insights into employment dynamics, highlighting both stability and gradual changes in the Indian labour market.

The World Bank has revised India’s GDP growth projection upward to 7.2% for FY26, up from an earlier estimate of 6.3% in June 2025. This revision reflects strong domestic demand, robust private consumption, and the positive impact of tax reforms that have improved disposable incomes, particularly in rural areas. Despite global uncertainties, including US tariffs on imports, India is expected to remain the fastest-growing major economy in FY26. The growth moderation to 6.5% is projected only for FY27, making 7.2% the accurate forecast for the current fiscal year.

India’s wholesale price inflation recorded a marginal rise to 0.83% in December 2025, marking a return to positive territory after two consecutive months of deflation. This increase was driven mainly by higher prices of manufactured goods, non-food articles, and certain raw materials. While food and fuel categories continued to remain in deflation, the intensity of price decline reduced significantly, supporting the overall upward movement. The data reflects stabilising input costs and improving demand conditions in the economy, even as inflation levels remained much lower compared to the same period in the previous year.