BRIJ PUBLIC

SCHOOL

PROJECT
FILE

STUDENT’S NAME :- RAVI KANT

DHANGAR
CLASS :- 12TH, SECTION :- C
SUBJECT ;- ECONOMICS
TOPIC :- INDIAN ECONOMY
SUBMITTED TO :- MR. KAMAL KISHOR SIR
{ LECTURER }

TEACHER SIGNATURE :- _________________________

ACKNOWLEDGEMENT
I would like to express my sincere gratitude to all
those who have helped me in completing this
project on the Indian Economy.

First and foremost, I am thankful to my teacher,

[MR. KAMAL KISHOR SIR], for providing me with
this opportunity to explore the topic of the Indian
Economy and for their constant guidance and
support throughout the project. I would also like
to thank our principal, [MR. SURESH YADAV], for
providing the necessary facilities and
encouragement for this academic endeavor.

I extend my thanks to my friends for their

valuable ideas and encouragement during the
project's preparation. I also want to thank my
 parents for their unwavering support and
inspiration.

Finally, I acknowledge God for making the

completion of this project possible.

Introduction
India’s economic journey over the past few years
has been marked by remarkable growth and a
steady rise in its position on the global stage.
After overtaking the United Kingdom (UK) to
become the fifth largest economy in Q1 FY23,
India has continued this upward trajectory to
surpass Japan in June 2025 to become the fourth
largest economy in the world. With a nominal
Gross Domestic Product (GDP) of Rs. 3,31,03,000
crore (US$ 3.78 trillion), India’s growth reflects a
combination of strong domestic demand and
policy reforms positioning the country as a key
destination for global capital.
Further, India is projected to reach a GDP of Rs.
4,26,45,000 crore (US$ 5 trillion) by 2027 and is
on course to surpass Germany by 2028. Rising
employment and increasing private consumption,
supported by rising consumer sentiment, will
support GDP growth in the coming months.

Market Overview

India’s economy shows robust

expansion, with real GDP for FY25
estimated at Rs. 1,87,97,000 crore
(US$ 2.20 trillion), from Rs. 1,76,51,000
crore (US$ 2.06 trillion) in FY24 with a
growth rate of 6.5%. This growth is
driven by rising employment and
stronger private consumption,
supported by improving consumer
sentiment, which is expected to keep
the momentum going in the near
future.
Trade remains a critical pillar of India’s
growth story with exports reaching Rs.
37,31,000 crore (US$ 436.6 billion) in
FY25, led by Engineering Goods
(26.88%), Petroleum Products (13.86%)
and Electronic Goods (8.89%). These
exports helped the economy stay
resilient during the pandemic when
other sectors slowed. Union Minister of
Commerce and Industry, Mr
Piyush Goyal projects exports to reach
Rs. 85,44,000 crore (US$ 1 trillion) by
2030.
India’s ability to attract Foreign Direct
Investment (FDI) has also
strengthened. The country received
record FDI inflows amounting to Rs.
4,21,929 crore (US$ 49.3 billion) in
FY25 a 15% increase over FY24,
supported

Source: World Bank

by a stable policy environment, a large domestic
market and steady economic growth positioning
the country as a key destination for global
capital. This capital inflow also complements
government plans for increased investment in
infrastructure and asset-building projects to
further boost economic growth.
India’s external economic position is improving.
The current account deficit narrowed to Rs.
1,98,726 crore (US$ 23.30 billion), or 0.6% of
GDP, in FY25 from Rs. 2,21,754 crore (US$ 26.00
billion), or 0.7% of GDP, in FY24. This
improvement was due to higher net receipts from
services and secondary income, according to the
Reserve Bank of India (RBI).
Recent Developments
India is primarily a domestic demand-driven
economy, with consumption and investments
contributing to 70% of the economic activity.
With India’s economy showing resilient growth,
supported by strong domestic demand, policy
reforms, and a healthy investment pipeline,
several new projects and developments are
underway across key sectors. This positive
development across key sectors is evident from
following key economic data points.
 According to the Department for Promotion of
Industry and Internal Trade (DPIIT), India's
cumulative FDI inflow stood at Rs. 91,45,988 crore
(US$ 1.07 trillion) between April 2000-March 2025
with major share coming from Mauritius at Rs.
15,36,849 crore (US$ 180.19 billion) with a total
share of 25%, followed by Singapore at 24% with
Rs. 14,91,603 crore (US$ 174.88 billion), the
United States (US) at 10% with Rs. 6,02,574 crore
(US$ 70.65 billion), the Netherlands at 7% with Rs.
4,54,613 crore (US$ 53.3 billion), and Japan at 6%
with Rs. 3,78,653 crore (US$ 44.39 billion).
 As of July 4, 2025, India’s foreign exchange
reserves stood at Rs. 59,68,048 crore (US$ 699.74
billion).
 In May 2025, private equity (PE) and venture
capital (VC) investments reached Rs. 20,470 crore
(US$ 2.4 billion) across 97 deals.
 Foreign Institutional Investors (FII) outflows in FY25
were close to Rs. 1,27,000 crore (US$ 14.89
billion), while Domestic Institutional Investors (DII)
bought in Rs. 6,00,000 crore (US$ 70.34 billion) in
the same period.
 The HSBC India Manufacturing Purchasing
Managers' Index (PMI) rose to a 14-month high of
 58.4 in June 2025 from 57.6 in May, indicating a
strong improvement in manufacturing conditions.
Robust domestic and international demand drove
sharp increases in output and new orders, while
employment saw a record rise as firms expanded
their workforce to meet rising workloads. New
export orders surged, marking the third-fastest
growth since the survey began in 2005. Although
input cost inflation eased, producer prices
increased as companies passed on higher freight
and labour costs to customers.
 India saw a robust 10.35% growth in passengers
carried by domestic airlines at 431.98 lakh in
FY25, from 391.46 lakh in FY24, according to the
Directorate General of Civil Aviation (DGCA).
 India secured 39th position out of 133 economies
in the Global Innovation Index 2024. India rose
from 81st position in 2015 to 39th position in
2024. India ranks third position in the global
number of scientific publications.
 In FY25, the Goods and Services Tax (GST)
recorded its highest-ever gross collection at Rs.
22,08,000 crore (US$ 258 billion), registering a
YoY growth of 9.4%. The average monthly
collection stood at Rs. 1,84,000 crore (US$ 21.57
billion).
 In May 2025, the overall Index of Industrial
Production (IIP) stood at 156.6 (base 2011–
12 = 100), reflecting a YoY growth of 1.2%. The
mining, manufacturing and electricity sectors
stood at 136.6, 154.3 and 216, respectively.
 According to data released by the Ministry of
Statistics & Programme Implementation (MoSPI),
India’s Consumer Price Index (CPI) - Combined
inflation was 3.34% in March 2025 against 4.85%
in March 2024.
 India’s wheat procurement for FY26 has reached
29.7 million tonnes as of May 22, 2025, the
highest in four years and up 13.5% YoY. Strong
production of 115.43 million tonnes, favourable
weather, and bonuses above the Minimum Support
Price (MSP) in key states have driven this growth.
The Food Corporation of India expects
procurement to hit 32.5 million tonnes by season
end, raising stocks to 44 million tonnes, well above
the 18.4 million tonnes needed for the Public
Distribution System.
Government Initiatives
Over the years, the Indian government has
introduced many initiatives to strengthen the
nation's economy. The Indian government has
 been effective in developing policies and
programmes that are not only beneficial for
citizens to improve their financial stability but
also for the overall growth of the economy. Over
recent decades, India's rapid economic growth
has led to a substantial increase in its demand for
exports. Besides this, several of the government's
flagship programmes, including Make in India,
Start-up India, Digital India, the Smart City
Mission, and the Atal Mission for Rejuvenation
and Urban Transformation, is aimed at creating
immense opportunities in India. In this regard,
some of the initiatives taken by the government
to improve the economic condition of the country
are mentioned below:
 On July 5, 2025, the Union Cabinet approved
the Rs. 1,00,000 crore (US$ 11.72 billion)
Research, Development and Innovation (RDI)
Scheme, launching long-term, low- or
zero-interest funding via a special purpose
fund under the ANRF to jump-start India’s
R&D ecosystem and support deep-tech and
startup innovation.
 On March 27, 2025, the Reserve Bank of
India proposed doubling the investment cap
for individual foreign investors in listed firms
 from 5% to 10%, with a combined foreign
individual limit increasing to 24%, to counter
Foreign Portfolio Investment (FPI) outflows.
 According to a report by Wood Mackenzie in
January 2025, India, the US, and West Asia
are expected to collectively add 100
Gigawatts (GW) of solar capacity by 2025,
while China is anticipated to continue its
leadership in the solar industry.
 In July 2024, the Ministry of Finance held the
Union Budget and announced that for 2024-
25, the total receipts other than borrowings
and the total expenditure are estimated at
Rs. 32,07,000 crore (US$ 375 billion) and Rs.
48,21,000 crore (US$ 564 billion),
respectively.
 In February 2024, the Finance Ministry
announced the total expenditure in Interim
2024-25 estimated at Rs. 47,65,768 crore
(US$ 571.64 billion) of which total capital
expenditure is Rs. 11,11,111 crore (US$
133.27 billion).
 On January 22, 2024, Prime Minister Mr.
Narendra Modi announced the 'Pradhan
Mantri Suryodaya Yojana'. Under this
 scheme, one crore households will receive
rooftop solar installations.
 On September 17, 2023, Prime Minister Mr.
Narendra Modi launched the Central Sector
Scheme PM-VISHWAKARMA in New Delhi.
The new scheme aims to provide recognition
and comprehensive support to traditional
artisans & craftsmen who work with their
hands and basic tools. This initiative is
designed to enhance the quality, scale, and
reach of their products, as well as to
integrate them with Micro, Small and
Medium Enterprises (MSME) value chains.
 On August 6, 2023, Amrit Bharat Station
Scheme was launched to transform and
revitalize 1,309 railway stations across the
nation. This scheme envisages development
of stations on a continuous basis with a long-
term vision.
 On June 28, 2023, the Ministry of
Environment, Forests, and Climate Change
introduced the ‘Draft Carbon Credit Trading
Scheme, 2023’.
 From April 1, 2023, Foreign Trade Policy
2023 was unveiled to create an enabling
 ecosystem to support the philosophy of
‘Aatmanirbhar Bharat’ and ‘Local goes
Global’.
 To enhance India’s manufacturing
capabilities by increasing investment and
production in the sector, the government of
India has introduced the Production Linked
Incentive Scheme (PLI) for Pharmaceuticals.
 Prime Minister’s Development Initiative for
North-East Region (PM-DevINE) was
announced in the Union Budget 2022-23 with
a financial outlay of Rs. 1,500 crore (US$
182.35 million).
 Prime Minister Mr Narendra Modi has
inaugurated a new food security scheme for
providing free food grains to Antyodaya Ann
Yojna (AAY) & Primary Household (PHH)
beneficiaries, called Pradhan Mantri Garib
Kalyan Ann Yojana (PMGKAY) from January 1,
2023.

Road Ahead
India’s economy grew by 6.5% in FY25. With a
7.4% growth rate in Q4 FY25, with RBI projecting
a growth rate of 6.5% in FY26 as well. India's
comparatively strong position in the external
sector reflects the country's positive outlook for
economic growth and rising employment rates. In
2024, India rose to 15th place globally in FDI
rankings and retained its position as South Asia’s
top recipient.
In H1 FY25, India’s growth-focused approach was
underscored by the government’s capital
expenditure outlay of Rs. 15,02,000 crore (US$
176 billion), reinforcing its commitment to
infrastructure-led development.
In the Union Budget of FY26, capital expenditure
took lead by steeply increasing the capital
expenditure outlay by 10% to Rs. 11,21,000 crore
(US$ 131 billion) over Rs. 10,18,000 crore (US$
119 billion) in FY25. Stronger revenue generation
because of improved tax compliance, increased
profitability of the company, and increasing
economic activity also contributed to rising
capital spending levels.
India’s total goods and service exports surged by
76% over the past decade, touching Rs.
70,36,425 crore (US$ 825 billion) in FY25, driven
by strong performance in engineering goods,
electronics, and pharmaceuticals. With a
reduction in port congestion, supply networks are
being restored.
With a proactive set of administrative actions by
the government, flexible monetary policy, and a
softening of global commodity prices and supply-
chain bottlenecks, inflationary pressures in India
look to be on the decline overall Partners.

India's national "net worth," understood through

economic indicators like GDP and net national income,
has shown steady growth over the last five years
(2020-2025), with its Gross Domestic Product (GDP)
growing from approximately $2.68 trillion in 2020 to an
estimated $3.78 trillion in the first quarter of 2025. Per
capita net national income has also increased,
reaching ₹1,69,496 in 2022-23. However, wealth
distribution remains a concern, with studies indicating
high levels of income inequality and a significant
portion of the population owning less than $10,000.

Economic Growth and GDP

Consistent Growth:
India's GDP has seen a substantial increase, reaching an estimated US$
3.78 trillion in the first quarter of 2025, up from US$ 2.68 trillion in 2020.
Economic Rankings:
India has advanced to become the fourth-largest economy in the world,
surpassing Japan in June 2025.

Income and Wealth Trends

Per Capita Income Rise: India's per capita net national income has also
been increasing.

Wealth Distribution: Despite overall growth, wealth distribution is

skewed. In 2022, a significant 73.8% of India's adult population owned less
than USD 10,000, a considerably higher percentage than the global
average.

Income Inequality: Studies from 2022-23 reveal India's top 1% income

share is among the highest globally, indicating growing inequality.

Key Drivers of Growth

Strong Domestic Demand:
Robust domestic consumption has played a significant role in driving
economic growth.

Policy Reforms:
Initiatives like the introduction of Goods and Services Tax (GST), the "Make
in India" campaign, and the liberalization of Foreign Direct Investment (FDI)
norms have boosted investor confidence and attracted foreign capital.

Services Sector Expansion:

The services sector, along with manufacturing, has shown robust growth,
contributing to the expansion of the economy.

What to Watch
Continued Reforms:
Ongoing reforms in various sectors remain crucial for positioning India as a
global economic powerhouse.

Investment and FDI:

Continued inflows of Foreign Direct Investment (FDI) are vital for further
economic expansion and achieving goals like becoming a US$ 100 billion
annual FDI destination.

While an interactive graph cannot be provided in text, you can visualize

India's economic growth using official data. The Indian economy has
seen a near threefold increase in Nominal GDP from approximately
₹106.57 lakh crore in FY 2014–15 to an estimated ₹331.03 lakh crore in
FY 2024–25, driven by factors like increased private consumption and a
resilient economy, according to the PIB.

Visualizing the Data

To understand the growth, you can use the following data points and
imagine them on a line graph:
Y-axis: Nominal GDP in Lakh Crores (₹).
X-axis: Financial Years.

Data Points (Lakh Crores ₹):

FY 2014–15:
₹106.57
FY 2015–16:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2016–17:
(Data not provided in the snippets but would be a step in the upward
trend)

FY 2017–18:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2018–19:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2019–20:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2020–21:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2021–22:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2022–23:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2023–24:
(Data not provided in the snippets but would be a step in the upward
trend)
FY 2024–25 (Estimate):
₹331.03

Interpreting the Graph

Steep Upward Trend:
The graph would show a very steep upward trend, indicating a
significant and rapid increase in the country's economic output.
Near Tripling of GDP:
The most striking feature would be the magnitude of the growth, with
the GDP nearly tripling in value over the 10-year period.
Drivers of Growth:
This growth is attributed to a combination of factors, including stronger
private consumption, sustained public investment, and an overall
resilient economic performance that has seen real GDP growth and a
surge in employment.

For a real graph, you could use a data visualization tool

and input the provided data from the PIB or Macrotrends.
Indian Economy Growth Rate, GDP & Economic ... - IBEF
India's economy shows robust expansion, with real GDP for FY25
estimated at Rs. 1,87,97,000 crore (US$ 2.20 trillion), from Rs. 1,
IBEF

India Becoming An Economic Powerhouse

16 Jun 2025 — India's GDP has witnessed a remarkable transformation
over the past decade. At current prices, GDP has increased from ₹...

India's Economic Surge

6 Jul 2025 — Over the past decade, India's economic size has expanded
sharply. In 2014–15, the GDP at current prices was ₹106.57 lakh...

India GDP for 2023 was 3.568 trillion US dollars,

a 6.38% increase from 2022.
India GDP for 2022 was 3.353 trillion US dollars,
a 5.88% increase from 2021.
India GDP for 2021 was 3.167 trillion US dollars,
a 18.41% increase from 2020.
India GDP for 2020 was 2.675 trillion US dollars,
a 5.67% decline from 2019.
GDP at purchaser's prices is the sum of gross value added
by all resident producers in the economy plus any product
taxes and minus any subsidies not included in the value of
the products. It is calculated without making deductions
for depreciation of fabricated assets or for depletion and
degradation of natural resources. Data are in current U.S.
dollars. Dollar figures for GDP are converted from
domestic currencies using single year official exchange
rates. For a few countries where the official exchange rate
does not reflect the rate effectively applied to actual
foreign exchange transactions, an alternative conversion
factor is used. The full historical dataset is available for
download here: India GDP | Historical Data | 1960 - 2023.
GDP (US $)

Chart

Combination chart with 2 data series.

View as data table, Chart
The chart has 2 X axes displaying Time, and navigator-x-
axis.
The chart has 2 Y axes displaying values, and navigator-y-
axis.
View all

End of interactive chart.

Per Capita (US $)

Chart

Combination chart with 2 data series.

View as data table, Chart
The chart has 2 X axes displaying Time, and navigator-x-
axis.
The chart has 2 Y axes displaying values, and navigator-y-
axis.
View all

End of interactive chart.

Annual % Change

Chart

Combination chart with 2 data series.

View as data table, Chart
The chart has 2 X axes displaying Time, and navigator-x-
axis.
The chart has 2 Y axes displaying values, and navigator-y-
axis.
View all

End of interactive chart.

 Region Rankings

Name GDP (US $)

World $100.000T

OECD members $64.747T

East Asia & Pacific $30.780T

North America $29.871T

European Union $18.591T

Euro Area $15.781T

Latin America & Caribbean $7.100T

South Asia $4.495T

Sub-Saharan Africa $2.045T

Country Rankings

Name GDP (US $)

United States $27.721T

China $17.795T

Germany $4.526T

Japan $4.204T

India $3.568T
United Kingdom $3.381T

France $3.052T

Italy $2.301T

Brazil $2.174T

Canada $2.142T
 Region Rankings

Name GDP (US $)

Russia $2.021T

Mexico $1.789T

Australia $1.728T

South Korea $1.713T

Spain $1.620T

Indonesia $1.371T

Netherlands $1.154T

Turkey $1.118T

Saudi Arabia $1.068T

Switzerland $884.94B

Poland $809.20B

Argentina $646.08B

Belgium $644.78B

Sweden $584.96B

Ireland $551.39B

Thailand $514.97B

UAE $514.13B

Israel $513.61B

Austria $511.69B

Singapore $501.43B

Norway $485.31B
 Region Rankings

Name GDP (US $)

Bangladesh $437.42B

Philippines $437.15B

Vietnam $429.72B

Denmark $407.09B

Iran $404.63B

Malaysia $399.71B

Egypt $396.00B

Hong Kong $380.81B

South Africa $380.70B

Nigeria $363.85B

Colombia $363.49B

Romania $350.78B

Czech Republic $343.21B

Pakistan $337.91B

Chile $335.53B

Finland $295.53B

Portugal $289.11B

Peru $267.60B

Kazakhstan $262.64B

New Zealand $252.18B

Iraq $250.84B
 Region Rankings

Name GDP (US $)

Algeria $247.63B

Greece $243.50B

Qatar $213.00B

Hungary $212.39B

Ukraine $178.76B

Kuwait $163.70B

Ethiopia $163.70B

Morocco $144.42B

Slovak Republic $132.91B

Dominican Republic $121.44B

Ecuador $118.84B

Puerto Rico $117.90B

Sudan $109.27B

Oman $108.81B

Kenya $108.04B

Guatemala $104.45B

Bulgaria $102.41B

Uzbekistan $101.59B

Costa Rica $86.50B

Luxembourg $85.76B

Angola $84.82B
 Region Rankings

Name GDP (US $)

Croatia $84.39B

Sri Lanka $84.36B

Panama $83.32B

Serbia $81.34B

Lithuania $79.79B

Tanzania $79.06B

Uruguay $77.24B

Ghana $76.37B

Azerbaijan $72.36B

Belarus $71.86B

Slovenia $69.15B

Myanmar $66.76B

Democratic Republic of Congo $66.38B

Turkmenistan $60.63B

Jordan $50.97B

Cameroon $49.28B

Uganda $48.77B

Tunisia $48.53B

Bahrain $46.08B

Macao $45.80B

Bolivia $45.14B
 Region Rankings

Name GDP (US $)

Libya $45.10B

Paraguay $42.96B

Cambodia $42.34B

Latvia $42.25B

Estonia $41.29B

Nepal $40.91B

Zimbabwe $35.23B

Honduras $34.40B

El Salvador $34.02B

Cyprus $33.89B

Iceland $31.33B

Senegal $30.85B

Georgia $30.78B

Papua New Guinea $30.73B

Zambia $27.58B

Bosnia $27.51B

Trinidad and Tobago $27.37B

Armenia $24.09B

Albania $23.55B

Malta $22.33B

Guinea $22.20B
 Region Rankings

Name GDP (US $)

Mozambique $20.95B

Mali $20.66B

Mongolia $20.33B

Burkina Faso $20.32B

Haiti $19.85B

Benin $19.68B

Jamaica $19.42B

Botswana $19.40B

Gabon $19.39B

Nicaragua $17.83B

West Bank and Gaza $17.42B

Afghanistan $17.23B

Guyana $17.16B

Niger $16.82B

Moldova $16.54B

Lao PDR $15.84B

Madagascar $15.79B

North Macedonia $15.76B

Republic of Congo $15.32B

Brunei $15.13B

Mauritius $14.64B
 Region Rankings

Name GDP (US $)

Bahamas $14.34B

Rwanda $14.10B

Kyrgyz Republic $13.99B

Chad $13.15B

Malawi $12.71B

Channel Islands $12.51B

Namibia $12.35B

Equatorial Guinea $12.34B

Tajikistan $12.06B

Somalia $10.97B

Mauritania $10.65B

Kosovo $10.47B

Monaco $10.00B

Togo $9.17B

Bermuda $8.14B

Montenegro $7.53B

Cayman Islands $7.14B

Barbados $6.72B

Maldives $6.59B

Sierra Leone $6.41B

Fiji $5.44B
 Region Rankings

Name GDP (US $)

Eswatini $4.44B

Liberia $4.24B

Djibouti $4.10B

Faroe Islands $3.91B

Andorra $3.79B

Aruba $3.65B

Suriname $3.46B

Curacao $3.28B

Belize $3.07B

Burundi $2.64B

Central African Republic $2.56B

Cabo Verde $2.53B

St. Lucia $2.43B

Gambia $2.40B

Seychelles $2.14B

Lesotho $2.12B

Timor-Leste $2.08B

Guinea-Bissau $2.05B

Antigua and Barbuda $2.03B

Solomon Islands $1.63B

Sint Maarten (Dutch part) $1.63B

 Region Rankings

Name GDP (US $)

Turks and Caicos Islands $1.40B

Comoros $1.35B

Grenada $1.32B

Vanuatu $1.13B

St. Vincent and the Grenadines $1.07B

St. Kitts and Nevis $1.06B

Samoa $938.19M

Sao Tome and Principe $678.98M

Dominica $653.99M

Micronesia $460.00M

Palau $281.85M

Kiribati $279.21M

Marshall Islands $259.30M

Nauru $154.17M

Tuvalu $62.28M
India’s importance in the global economy and as an economic partner to the EU is
growing. Its share in the global economy, measured in purchasing power parity
(PPP) terms, rose from 4% in 2000 to around 7.5% by 2023. IMF projections
suggest that this share could rise to around 10% in 2030 ([1]). At global level, strong
growth in India is projected to partially offset the slowdown in trend growth in China.
India’s GDP per capita in PPP terms has increased more than fivefold since 2000,
to USD 10,233 in 2023, though it remains at only 42% of that of China.

This special topic presents a snapshot of the Indian economy, highlighting its
structural characteristics, recent developments, and the challenges that have so far
hindered its deeper integration into the global economy. It also examines policy
responses and explores India's economic relationship with the European Union.
Starting in spring 2025, the forecast publications will include a specific country
chapter on India and a more detailed forecast.

Structural features and challenges

India's economic history since independence in

1947 can be divided into two phases. The first
phase, from 1947 to 1991, was characterized by a mixed
economy model under the so-called "License Raj" system of
strict government control and regulation, intended to protect
Indian industry, promote self-reliance and ensure regional
convergence. This period was characterised by moderate
growth, averaging around 3.5% annually. The second phase
began with the landmark economic reforms of 1991, triggered
by a balance of payments crisis. These reforms ushered in an
era of liberalisation, privatisation and globalisation that
dismantled many of the restrictive economic policies. This
shift led to significantly higher growth rates, averaging 6-7%
annually, propelling India to become one of the world's
fastest-growing major economies. The post-1991 period has
seen the rise of India's IT and services sectors, substantial
poverty reduction, and an expanding middle class, though
challenges such as income inequality and infrastructure
deficits persist. In particular, progress on poverty reduction
has been patchy and in 2022 about 12% of Indians still lived
on less than USD 2.15 per day.

Graph II.2.1: GDP per capita in India and selected countries

Source: IMF

India’s economic growth model stands out for

its strong reliance on domestic
consumption. The latter accounts for around 70% of its
GDP, as the country's young, growing population has fuelled
strong growth in internal demand. This consumption-driven
growth model distinguishes India from many export-
dependent economies, particularly in Asia. While it presents
challenges, such as for managing inflation and trade deficits,
it positions India favourably in the current global environment,
by providing a buffer against external economic shocks and
reducing vulnerability to international trade tensions and
supply chain disruptions.

India’s economic development has quickly

transitioned from a predominantly agrarian
economy to one led by services. India’s economic
development thus presents a potentially unique hybrid
development model that combines a strong services sector
with an emerging manufacturing base. However, many
workers, especially those with limited education or skills, face
barriers to securing quality jobs in the service sector and
instead rely on self-employment or unpaid work, primarily in
agriculture, construction and retail. These three sectors
account for over half of total employment, and remain
characterised by low productivity, limited value added and
slow convergence to global productivity standards.

The agriculture and industry sectors exhibit low

productivity and competitiveness. The agriculture
sector, which still employs nearly half of India’s workforce,
remains under-productive due to insufficient investment,
outdated practices, and heavy dependence on government
subsidies and price support schemes. Turning to the industrial
sector, its share in GDP has declined almost uninterruptedly
from 32.3% in 2011 to 27.6% in 2023, driven by the lagging
manufacturing and mining sectors, undermined by poor
infrastructure. In contrast to China, which accounted for
28.7% of global manufacturing output in 2021, India's share
was only about 3.1%. Furthermore, India lags when it comes
to integration in global manufacturing supply chains. Its
widespread use of protectionist measures may impede the
emergence of a strong manufacturing ecosystem, by limiting
foreign direct investment (FDI) and integration into global
value chains (GVC). Recently, the government's "Make in
India" initiative and Production-Linked Incentive (PLI) schemes
are actively promoting industrial growth, particularly in
sectors like pharmaceuticals, automotive, and electronics.

Graph II.2.2: Yields of cereals in India selected economies

 Source: FAO.

India’s population dynamics underpin its long-

term economic potential. With a population estimated
at 1.44 billion, in 2023 India became the world’s most
populous country, surpassing China. According to UN
projections ([2])(), India’s population will continue growing until
mid-century to around 1.7 billion, offering a unique
demographic dividend to the economy. A young and
expanding workforce – if fully harnessed – could drive
productivity improvements and growth in domestic
consumption for many years, positioning India as a new
engine of global economic growth.
At the same time, India faces important
structural challenges that may limit its growth
potential. Notwithstanding this demographic dividend,
India has so far been unable to provide the sort of mass
employment achieved in China. Approximately 90% of India’s
workforce is engaged in informal employment ([3]), with many
workers trapped in low-wage, insecure jobs that lack legal
protection and benefits. Furthermore, women's participation
in the workforce is exceedingly low, at approximately 26% in
2023, compared to a global average of around 47%.
Furthermore, according to IMF estimates, India will need to
generate between 145 and 330 million additional jobs by
2050 to meet the demands of its growing population. So far,
capital deepening and productivity gains have accounted for
the majority of growth, with little contribution from labour.
The IMF estimates India’s medium-term potential growth at
6.3% ([4]), reflecting increased capital spending and a more
robust labour market. Nevertheless, low overall productivity, a
struggling manufacturing sector, a complex business
environment, large labour market disparities, and the
increasingly adverse effects of climate change may weigh on
India’s growth potential if left unaddressed.

Climate change is emerging as a significant

structural impediment to growth in India,
characterised by prolonged periods of extreme
temperatures, irregular precipitation and an
increase in severe weather events. Over 75% of
Indian districts are classified as hotspots for extreme climate
events ([5]) and projections suggest that annual GDP losses
due to extreme temperatures could reach 2.5-4.5% by
2030 ([6]). As one of the countries most vulnerable to climate
change, and the third-largest CO 2 emitter, India is committed
to a low-carbon development path and has pledged to reach
net zero emissions by 2070. However, significant investment
will be required to enhance India’s climate resilience. India’s
Ministry of Finance estimated a financing gap of USD 2.5
trillion (around 67% of India’s GDP) to meet India's nationally
determined contribution (NDC) commitments by 2030 ([7]).

Recent economic developments

India emerged from the pandemic crisis as the

fastest growing G20 economy. GDP growth averaged
6.5% in the 20 years before the pandemic. The Indian
economy shrank by 6.6% during the first wave of COVID-19.
The labour market suffered severe disruptions as the
unemployment rate spiked, particularly in urban areas where
informal workers and migrants were hardest hit, causing a
notable increase in poverty levels. However, the economy
rebounded quickly, registering an impressive 7.9% average
growth rate since 2021. The key driver of India's post-
pandemic recovery has been a surge in household
consumption, which has grown by 7.8% per annum on
average since 2021, boosted by improved labour market
conditions, especially among casual workers. Investment grew
by almost 12% per annum on average in the same period,
supported by strong public investment in infrastructure. At
the same time private sector investment has poured into
sectors like real estate and manufacturing.

Graph II.2.3: Contributions to global GDP growth

Source: IMF.

Inflation was quickly brought under control,

thanks to prudent monetary policy. The Indian
economy is particularly vulnerable to commodity price
inflation. Driven by global food and energy price shocks along
with supply chain disruptions, inflation peaked at 6.7% in
2022. The timely and aggressive tightening of monetary
policy by the Reserve Bank of India (RBI) anchored inflation
expectations and helped guide inflation back within the RBI’s
tolerance band (2-6%). Inflation fell below the RBI target of
4% in July 2024, opening up potential space for monetary
loosening. Monetary policy was also effective at managing
depreciation pressures. After depreciating by 9.4% against
the US dollar in 2022, the Rupee exchange rate movements
moderated, which prompted the IMF to reclassify India’s de
facto exchange rate regime from “floating” to a “stabilised
arrangement”. India’s foreign exchange reserves stood at
more than USD 700 billion in September 2024, covering more
than 12 months worth of imports. With the exchange rate
more tightly managed, ample reserves should help cushion
the impact of external shocks going forward.

India’s fiscal position worsened considerably

during the pandemic, but consolidation efforts
have been ongoing since. Public debt shot up during
the pandemic, from 74.3% of GDP in 2019-Q4, to 89.3% in
2021-Q1. It has since come down to around 83% of GDP. Debt
sustainability risks are relatively contained. The bulk of public
debt is in the form of rupee-denominated fixed-rate
instruments of long maturity, predominantly held by
residents. Still, fiscal risks remain present given past
instances of fiscal slippages between 2000 and 2020, and
India’s sensitivity to external shocks. The government budget
deficit has come down since the pandemic and the new FY24
budget foresees further deficit reduction, with the authorities
planning to achieve the central government deficit target of
4.5% of GDP by FY26.
India's financial sector has strengthened
significantly in recent years, positioning it to
support the country’s fast-growing economy
and rising investment needs. After several years of
slow credit growth, during which banks significantly improved
their balance sheets, a new credit cycle began in mid-2021.
Banks have reduced their non-performing loans (NPLs) from
around 11% in 2018 to below 4% in 2023. Meanwhile, the
average capital adequacy ratio has increased from below 13%
to above 17% in 2023, comfortably above regulatory
thresholds of 9% for commercial banks and 12% for publicly
owned banks. As the financial sector strengthened its balance
sheets, credit growth picked up markedly, from 8% in 2019 to
almost 15% in 2025. Still, both household and corporate
sector indebtedness remains moderate, at 42.7% and 55.8%
of GDP in 2024-Q1 respectively.

Graph II.2.4: India - monetary developments

 Source: The Reserve Bank of India.

India has been running a current account

deficit almost uninterruptedly since 2000. The
scale of deficits was mostly in line with fundamentals for a
developing country in need of capital, and in most years were
largely financed by flows of foreign direct investment. The
current account deficit temporarily increased during 2022, to
2.4% of GDP from 1% in 2021, due to the energy price shock
worsening India’s terms of trade. It has since come down to
around 1% in 2023 and 2024-H1. Over the last 10 years,
India’s national international investment position (NIIP)
improved significantly. NIIP stood at -9.5% of GDP in H1 2024,
up from -17.5% of GDP in 2014. At around 18.5% of GDP in
2024-H1, India’s external debt is low compared to peers.
Furthermore, a large share of it is long term, limiting rollover
risks.
Policy priorities and opportunities

The Indian government has been implementing

a series of reforms to unlock the country's
potential. One of the most significant initiatives is labour
market reform. In 2020, the central government streamlined
labour regulations by passing four major labour codes, with
the aim to enhance labour flexibility, reduce regulatory
complexity, and improve the conditions for formal
employment. However, the implementation of these reforms
at state level is lagging.

Investment in infrastructure is a key

component of India’s development
strategy. Public non-defence capital expenditure increased
from 3.1% of GDP in FY19/20 to an estimated 4.9% of GDP in
FY23/24, with both central and state governments increasing
spending on infrastructure. For example, India doubled the
number of airports over the past 10 years, and is adding 10
000 km of new roads and 15GW of solar-energy capacity each
year ([8]). Nevertheless, there are still critical gaps,
particularly in transport, energy and logistics, which limit
access to markets and dampen growth. The focus on
improving physical and digital infrastructure is therefore vital
for increasing private sector productivity, to improve market
access, and enhance India's global competitiveness.
India is also working to promote exports and
attract foreign direct investment. With global
supply chains shifting due to geopolitical factors, India has an
opportunity to benefit from the "friendshoring" trend, which
involves relocating production to trusted countries. For
example, global companies like Apple, Samsung and Foxconn
have lately been expanding investment in new production
capacities in India to diversify their supply lines. For the
moment, most of their business in India is known as Final
Assembly, Test and Pack (FATP), a low value added, labour-
intensive process that assembles components largely
imported from China. The government has introduced several
initiatives, such as the Production-Linked Incentive (PLI)
scheme, designed to attract foreign firms to establish
manufacturing capacities in India, but also to incentivise them
to go beyond establishing only FATP operations and
encourage purchases of inputs in the domestic market.
Furthermore, the authorities have recently been pursuing new
trade agreements (e.g. with UAE and Australia) to
complement existing export promotion policies and help
increase bilateral trade and investment.

Graph II.2.5: FDI inflows comparison between India and China

 Source: Reserve Bank of India and National Bureau of Statistics of

India’s growing digital economy presents

another major opportunity. The country is already a
global leader in information technology (IT) and business
process management (BPM). The IT-BPM sector is projected to
account for 10% of India’s GDP by 2025 and is highly export-
oriented, with around 80% of its total revenue coming from
abroad. Aside from price competitiveness, the IT industry in
India benefits from a large number of skilled and English-
speaking workers and the rapid expansion of digital
infrastructure. India now hosts four of the world's top 100
science and technology clusters —Bengaluru, New Delhi,
Mumbai, and Chennai ([9]). In recent years, India has also
become the third largest source of startups globally,
producing 118 unicorns with a combined value of over USD
350 billion.
EU-India economic relationship

Graph II.2.6: Trade openness

Source: WB WDI, IMF WEO.

The European Union (EU) and India share a

robust and growing economic relationship. The
EU is India's largest trading partner, accounting for €124
billion worth of total trade in goods in 2023 or 12.2% of total
Indian trade. India’s other major trade partners are USA
(10.8% of total trade) and China (10.5%). However, India only
accounts for 2% of the EU’s external trade and ranks as the
9th major EU trading partner. EU traders and investors
continue to face many market access barriers on the Indian
side, such as prohibitive import duties, sanitary and
phytosanitary restrictions, and a growing number of technical
barriers to trade. Despite these impediments, trade in goods
between the EU and India has increased by almost 90% in the
last decade, while in services it reached €50.8 billion in 2023,
up from €30.4 billion in 2020. The EU is also a major source
of FDI into India, particularly in the services sector, including
telecommunications, financial and business services. The
stock of EU’s direct investment in India reached EUR 108.3
billion in 2022, up from EUR 82.3 billion in 2019, making the
EU a leading foreign investor in India. Yet, this is still below
the EU’s foreign investment stocks in China (EUR 247.5
billion) or Brazil (EUR 293.4 billion).

There is substantial potential for further

deepening EU-India economic ties. Ongoing
negotiations (the 9th round of talks concluded in September
2024 in Delhi) for a Free Trade Agreement (FTA) hold promise
for expanded trade in goods and services, as well as
enhanced cooperation in key areas such as clean energy,
smart cities and sustainable transportation. The FTA could
help reduce trade barriers and align regulatory standards,
providing opportunities for businesses on both sides to
expand their operations. In recent years, the EU and India
have also strengthened their cooperation in areas like climate
change, sustainable development and the digital economy. As
India moves toward a low-carbon development path, there is
significant scope for collaboration in renewable energy,
electric mobility and energy-efficient infrastructure.
Footnotes
([1])
Srivastava, D.K. (2022). “Indian economy by 2050: In
pursuit to achieve the $30 trillion mark .” EY-India
[Internet]
([2])
United Nations, Department of Economic and Social
Affairs, Population Division (2024). World
Population
Prospects 2024: Data Sources. (UN DESA/POP/2024).
([3])
International Labour Organization (ILO) (2019), Informal
Employment Trends in the Indian Economy: Persistent
informality, but growing positive development, Working Paper
No. 254
([4])
International Monetary Fund (IMF) (2023). India Article
IV consultation, Washington DC: IMF, December.
Mohanty, Abinash (2020). “Preparing India for Extreme
([5])

Climate Events: Mapping Hotspots and Response

Mechanisms.” Council on Energy, Environment and Water.
McKinsey Global Institute (2020), “Will India get too hot to
([6])

work?” Case study

Government of India, Ministry of
([7])
Finance (2024),
Economic Survey 2023-24. New Delhi, July
([8]) “
How strong is India’s economy?,” The Economist, April
2023
([9])
World Intellectual Property Organization (WIPO)
(2024). Global Innovation Index 2024 Unlocking the
Promise of Social Entrepreneurship. Geneva: WIPO
Last update

Spring 2025 Economic Forecast: Moderate growth

amid global economic uncertainty