India's economy in 2025 is being shaped by a confluence of factors, creating a dynamic and promising outlook. From effectively managing inflation to witnessing a boom in Initial Public Offerings (IPOs), several forces are at play, driving India's economic trajectory.
1. Inflation Under Control:
After a period of high inflation, India has made significant strides in controlling price rises. In November 2025, the inflation rate stood at a modest 0.71%, a slight increase from the record low of 0.25% in October 2025. This is well below the Reserve Bank of India's (RBI) target of 4%. The RBI expects inflation to remain comfortably below this target, potentially leading to further repo rate cuts to stimulate growth. Factors contributing to this contained inflation include declining food prices due to ample supply and consumption tax cuts by the government.
2. IPO Market Boom:
The Indian IPO market has reached unprecedented levels in 2025, with a record ₹1.75 lakh crore raised by 101 companies. This surge indicates strong domestic liquidity and investor confidence. While average listing gains have decreased compared to previous years, the sheer volume of IPOs demonstrates the vibrancy of the primary market. Several large IPOs, including Tata Capital, HDB Financial Services and LG Electronics India, dominated the fundraising landscape. The SME segment has also experienced substantial growth, reflecting the increasing depth and scale of India's primary markets.
3. Robust GDP Growth:
India remains the world's fastest-growing major economy. Various organizations project a healthy GDP growth for India in fiscal year 2025-26. S&P Global forecasts a growth of 6.5%. Deloitte projects a growth between 6.7% and 6.9%. The IMF has increased India's growth projection to 6.6% for 2025. This growth is attributed to strong domestic demand, government capital expenditure, and a resilient services sector.
4. Government Spending and Infrastructure Development:
The Indian government is actively investing in infrastructure development, with a focus on roads, railways, ports, and digital infrastructure. This capital expenditure is expected to have strong multiplier effects on economic growth, attracting further private investment in the medium to long term. The government's commitment to infrastructure development is a key driver of economic activity.
5. Strong Domestic Consumption:
Private consumption accounts for a significant portion of India's GDP. Easing inflation, lower policy rates, tax exemptions, and a rising urban middle-income class are driving sustained consumer spending. While urban demand has been relatively weak, it is expected to revive due to tax relief and softening inflation. A favorable monsoon season is also expected to boost income for India's rural population, further strengthening demand for fast-moving consumer goods.
6. Thriving Manufacturing and Services Sectors:
Expansion in the manufacturing and services sectors continues to propel India's economic growth. The government's Production-Linked Incentive (PLI) scheme is boosting manufacturing, particularly in sectors like precision engineering and robotics. Strong export growth in services, especially in pharmaceuticals and electronics, is further bolstering economic activity.
However, some challenges remain. Global trade uncertainties and potential trade tensions could pose risks to India's economic growth. It is important for the government and other public stakeholders to balance enhancing domestic growth drivers, attracting foreign capital, and improving external market access to achieve long-term sustainable growth.
Overall, India's economy in 2025 is characterized by a positive outlook, driven by controlled inflation, a booming IPO market, robust GDP growth, government spending on infrastructure, strong domestic consumption, and thriving manufacturing and service sectors. While challenges persist, India is well-positioned to continue its growth trajectory and solidify its position as a major global economy.
