By bigbreakingwire 
India’s economy is gaining momentum in the second half of 2024-25, as indicated by various high-frequency indicators. This positive trend is expected to continue. Despite global economic challenges and uncertainties, India is set to remain the fastest-growing major economy in 2025-26, with the IMF and World Bank projecting GDP growth of 6.5% and 6.7%, respectively.
The Union Budget 2025-26 aims to balance fiscal discipline and economic growth by increasing capital spending while also boosting household incomes and consumption. The share of effective capital expenditure in GDP is expected to rise to 4.3% in 2025-26 from 4.1% in the revised estimates for 2024-25.
Inflation in India dropped to a five-month low of 4.3% in January, mainly due to a significant fall in vegetable prices as winter crops entered the market. The economy is recovering in the latter half of 2024-25 after losing momentum in the first half. Meanwhile, the Indian rupee has weakened, similar to other emerging market currencies, due to the strong US dollar.
India’s strong economic fundamentals and improvements in external sector indicators have helped the country navigate global uncertainties. However, the RBI bulletin notes that trade policy uncertainty in the US has risen to levels last seen during the 2019 US-China trade war. This could lead to long-term changes in global trade patterns and higher costs for businesses and consumers.
The global economy is growing at a moderate pace, with different countries experiencing varying economic conditions amid shifting political and technological factors. Financial markets remain cautious due to slowing inflation reduction and concerns over tariffs. Emerging markets, including India, are facing selling pressure from foreign investors and currency depreciation due to the strong US dollar.
India’s Economic Recovery Strengthened by Easing Inflation and Policy Support: RBI
India’s economy has regained momentum, with consumption demand expected to rise as inflation eases and tax benefits take effect, according to the Reserve Bank of India’s latest monthly bulletin. The central bank emphasized that government policies and fiscal measures are crucial in maintaining growth and financial stability.
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