The year 2025 proved transformative for the Indian economy, as a mix of macroeconomic stability, strategic policy action and robust market sentiment propelled growth and market confidence.
While inflation fell to a multi-year low, interest rates eased, investment activity gained momentum and the equity market hit fresh heights. Thousands of new investors entered capital markets, supporting one of the busiest IPO seasons in recent history. Against a complex global backdrop, India stood out as a dynamic growth story.
Let’s take a look at the 6 key reasons why our economy gained such velocity.
1. India emerges as a top growth engine
India’s growth performance in 2025 ranked among the strongest globally. The Reserve Bank of India’s latest bulletin showed the economy expanding by a robust 8.2% in the July–September quarter, driven by firm domestic demand and resilient private consumption. Reflecting this momentum, the RBI raised its full-year GDP growth forecast to 7.3% for FY26 from earlier estimates, signalling sustained economic strength even as global conditions remained uncertain. Retail inflation stayed below the central bank’s tolerance band, allowing monetary policy to remain supportive of growth.
International institutions meanwhile project India to remain one of the fastest-growing major economies. The IMF’s Article IV consultation anticipates growth of around 6.5% for 2025/26, sustained by strong private consumption and investment, even as global trade moderates.
2. Infrastructure, manufacturing and investment take centre stage
Government investment in core sectors such as infrastructure, electronics, renewable energy and manufacturing continued to anchor broad-based growth. Data from the RBI shows that gross fixed investment and foreign direct investment remained strong through much of 2025, emphasising business confidence and long-term capital flows. Services exports and remittances also bolstered overall performance.
3. Inflation control and cheaper credit
A defining feature of 2025 was India’s success on the inflation front. Government data shows headline inflation at a record low of 0.25% in October, its lowest reading since the current CPI series began. Food price deflation, GST rate rationalisation and favourable base effects contributed to this historic outcome.
Buoyed by subdued price pressures, the Reserve Bank of India eased policy aggressively throughout the year. In December 2025, the Monetary Policy Committee cut the policy repo rate by 25 basis points to 5.25%, marking the fourth reduction in 12 months and bringing cumulative easing to 125 basis points, the most significant cycle since 2019.
Lower interest rates translated into cheaper home and business loans, supporting credit demand and investment.
4. Services exports and remittances underpin external resilience
India’s current account position remained steady even as global headwinds persisted. The National Statistics Office and RBI data show that services exports including IT, business process services and professional consulting, continued to grow strongly, helping to offset merchandise trade volatility. Remittances also played an important stabilising role in the external account.
5. IPO boom energises capital markets
India’s equity markets saw a historic surge in initial public offerings in 2025. Between October 2024 and September 2025, more than 86 IPOs raised roughly ₹1.71 lakh crore, nearly double the previous year’s haul. Many listings were oversubscribed and delivered strong returns, driven by enthusiastic participation from retail investors, mutual funds and pension capital. The wave of listings reflected renewed confidence in Indian equities and strengthened domestic savings channels.
6. Domestic investors anchor market resilience
While foreign portfolio investment flows remained uneven amid global uncertainties, domestic investors helped stabilise Indian markets. The rise of systematic investment plans (SIPs), an expansion in Demat accounts and a “buy the dip” mentality among retail investors provided robust support for benchmark indices like the Nifty 50 and Sensex, which climbed through much of 2025. This domestic participation mitigated external volatility and amplified the market’s depth.
