Current Affairs - Economy

In the financial year 2024-25 (FY25), India’s leather and non-leather footwear exports experienced a notable growth of 25%, totalling $5.7 billion. This surge reflects strong demand and performance in the sector, supported by initiatives and market expansion efforts. The Council for Leather Exports (CLE) has projected that this upward trend will likely continue, with expectations of crossing the $6.5 billion threshold in FY26. The 25% growth rate underscores the competitiveness and rising global footprint of India’s leather industry, making it a key contributor to the country’s export economy.

In March 2025, India’s pharmaceutical exports experienced a remarkable YoY surge of 31.21%, reaching $3.68 billion compared to $2.80 billion in March 2024. This made March the strongest-performing month of FY25 in terms of export growth. The impressive increase was driven by a shortage of generic prescription drugs in the US, strategic diversification into new markets, and urgency to ship ahead of a proposed US tariff hike, which was later paused. Despite global economic and logistical challenges, this surge contributed significantly to India surpassing its annual pharmaceutical export target.

The World Trade Organization has projected a 0.2% decline in global merchandise trade for 2025, reflecting heightened trade tensions and increasing uncertainty in global trade policy. This figure contrasts with the 2.9% growth seen in 2024 and underscores a troubling shift driven largely by tariff measures and ongoing disputes, particularly between the US and China. The WTO warns that if these tensions worsen, the contraction could deepen significantly. While global services trade is expected to grow modestly at 4.0%, the slowdown in merchandise trade affects key service sectors like transport and investment. Least-developed countries are especially vulnerable due to their dependence on exports.

According to UNCTAD's "Trade and Development Foresights 2025" report, India is expected to grow at a rate of 6.5% in 2025, maintaining its position as the fastest-growing major economy in the world. This growth is supported by strong government spending, including infrastructure and social sector investments, as well as a supportive monetary policy stance by the Reserve Bank of India (RBI), which has helped stimulate demand and economic activity despite global economic challenges.

In March 2025, India witnessed a significant drop in retail inflation to 3.34%, marking its lowest level since August 2019. This easing was primarily driven by a sharp decline in food inflation, which fell to 2.69%. The drop in prices of essential food items like vegetables, eggs, pulses, meat, fish, and milk played a key role in bringing overall inflation down. Reflecting this positive trend, the Reserve Bank of India adjusted its inflation forecast for 2025–26 to 4.0% from an earlier projection of 4.2%, attributing the change to improved prospects in food prices.