The International Monetary Fund (IMF) has reaffirmed that India will maintain its status as the fastest-growing major economy, projecting a GDP growth rate of 6.5% for 2025-26. This growth is expected to be driven by strong private investment and sustained macroeconomic stability, according to the IMF’s latest Article IV consultation report on India.
The IMF noted that India's solid economic performance provides a unique opportunity to implement key structural reforms that would help the country achieve its long-term ambition of becoming an advanced economy by 2047. “Real GDP is expected to grow at 6.5% in both 2024-25 and 2025-26, supported by robust private consumption and sustained macroeconomic and financial stability,” the report stated.
The projection aligns with the Indian government’s second advance estimate, which also pegged GDP growth at 6.5% for 2024-25. The IMF further highlighted that while inflation has generally remained within the Reserve Bank of India's (RBI) tolerance band of 2-6%, food price fluctuations have caused occasional volatility. However, as food price shocks subside, headline inflation is expected to stabilize further.
The multilateral agency emphasized the need for comprehensive structural reforms to enhance private investment, create high-quality jobs, and unlock India’s full economic potential. It identified key areas for reform, including labor market policies, human capital development, and greater participation of women in the workforce. The IMF also underscored the importance of boosting Foreign Direct Investment (FDI) and private investment through stable policy frameworks, improvements in ease of doing business, governance reforms, and enhanced trade integration, including tariff and non-tariff reductions.
Despite recent moderations, the IMF noted that India’s economic growth remains strong, with year-on-year GDP growth recorded at 6% in the first half of 2024-25. The financial sector continues to show resilience, with non-performing loans at multi-year lows. Additionally, fiscal consolidation has progressed, and the current account deficit has remained under control, largely due to robust growth in service exports.
The IMF’s outlook reinforces confidence in India's economic trajectory while urging policymakers to implement deeper structural reforms to sustain long-term growth and investment momentum.
