Yearender 2025: A Testing Year For India, But Growth Holds Steady
Former Vice Chairman of NITI Aayog Rajeev Kumar said to ETV Bharat that India has tackled all the geopolitical uncertainties, including the Trump tantrums.
Published : December 18, 2025 at 5:32 PM IST
By Saurabh Shukla
New Delhi: The year 2025 has been one of the most eventful years in recent times. During this period, India faced multiple challenges. From rising tensions along the Pakistan border, tariffs imposed by the United States, and sustained pressure to stop purchasing oil from Russia, all these developments raised concerns about a possible slowdown in the economy.
However, the policy framework followed consistently over the past several years helped cushion these shocks. As a result, the economy has remained resilient and continues to grow steadily. In the most recent second quarter of the financial year 2025, GDP grew by 8.2 percent, giving confidence that growth will remain above 7 percent for the full financial year. Experts say that while India is losing some export share in the US market, this loss is being made up by rising exports to other countries.
To counter the uncertainty and reduce negative sentiment, the Government of India has rationalised GST rates. This move is expected not only to boost consumption but also to strengthen the country’s manufacturing capacity. Experts believe that, under the given global and geopolitical circumstances, this performance is highly creditable for a large economy like India.
Growth momentum to continue
Prof Mahendra Dev, Chairman Economic Advisory Council to the Prime Minister, spoke to ETV Bharat at length on it and said that the country's economic growth is in a comfortable zone while at the same time inflation is also low, creating what can be described as a 'Goldilocks Situation' of high growth with low inflation.
The Reserve Bank expects inflation to be close to 2 percent this year, which has allowed for a cumulative 1.25 percentage point cut in the repo rate over the past six months, supporting growth.
Fiscal policy has also played a supportive role, with capital expenditure rising sharply and its share in the budget increasing from about 12 percent to 22 percent. Together, accommodative monetary policy and higher government spending are helping both growth and inflation control. Overall, the macroeconomic outlook is strong, and despite external risks, India is expected to maintain higher growth in the coming years.
Former Vice Chairman of NITI Aayog Rajeev Kumar said to ETV Bharat that India has tackled all the geopolitical uncertainties, including the Trump tantrums. He also said that going forward, we might see a slight decline in the rates of growth in the second half of the year because the first half has grown at 8 per cent. But overall, the year 2025-26 will see the economy growing at above 7 per cent, which is a very creditable performance for any large economy in the given circumstances. According to him, we are on the right track. Huge improvement in our infrastructure is helping everybody, including the corporates. I expect that the economy will continue on this path for the next several years.
Exports rise, domestic demand firm
As per the latest trade data, cumulative exports during April to November 2025 are estimated at $562 billion, as compared to $533 billion last year, a growth of 5.43 percent. On the economic growth front, the RBI believes that GST rationalisation and festival-related spending supported domestic demand during October and November. Rural demand continues to be robust while urban demand is recovering steadily.
RBI Governor Sanjay Malhotra said in his December 05 Monetory Policy Review statement that Investment activity remains healthy with private investment gaining steam on the back of expansion in non-food bank credit and high capacity utilisation. Looking ahead, he believes that domestic factors such as healthy agricultural prospects, continued impact of GST rationalisation, benign inflation, healthy balance sheets of corporates and financial institutions, and congenial monetary and financial conditions should continue to support economic activity.
External uncertainties continue to pose downside risks to the outlook, while the speedy conclusion of various ongoing trade and investment negotiations presents upside potential. Taking all these factors into consideration, real GDP growth for 2025-26 is projected at 7.3 per cent, with Q3 at 7.0 per cent, and Q4 at 6.5 per cent. The risks are evenly balanced, added his statement.
Declining Rupee is not a concern
As the rupee declined to a record low this year, crossing the level of 91 per dollar on December 16, a recent report by CARE Edge notes that the rupee has weakened mainly due to a wider trade deficit, weak capital inflows, and uncertainty around the India-US trade deal. With the RBI allowing limited depreciation and global factors like a softer dollar and possible US rate cuts, the rupee is expected to edge towards 87 by the end of FY26.
India's Billionaire List
India’s billionaire list continues to be led by Mukesh Ambani, followed by Gautam Adani and his family. Savitri Jindal and her family rank next, while Sunil Mittal and his family, and Shiv Nadar complete the list of the top five richest in India.
US Tariff Impact
According to November 2025 data, India’s exports to the US happily climbed to $7.0 billion, up from $6.3 billion in October, even though punitive 50% tariffs were still fully in force. According to an analysis by the Global Trade Research Initiative (GTRI), the year’s trajectory was brutal but logical at first. Exports under a 10 percent reciprocal tariff rose from 8.4 billion dollars in April to 8.8 billion dollars in May, before easing in June and July. The real shock came in August, when tariffs jumped rapidly from 10 to 25 and then 50 percent, pulling exports down to 6.8 billion dollars. September, the first full month under the 50 percent regime, saw exports sink to 5.5 billion dollar the year’s low.
GTRI founder Ajay Srivastava told ETV Bharat that October and November reversed the slide, despite no tariff relief. Even without final product level data for November, the likely explanation is higher exports of tariff exempt or less affected items such as smartphones, pharmaceuticals and petroleum products. India now has a credible case to push the USA for an immediate cut from 50 to 25 percent, especially after India sharply reduced Russian crude imports, addressing a core US grievance.
Also, India should not agree to diluting data protection laws, allowing inventory-based e commerce models, or opening the door to GM agricultural imports. Export recovery is not a reason to concede; it is proof of leverage. On the domestic front Government should notify specific export schemes under the Export promotion Mission, he added.
Inflation measured by the Consumer Price Index (CPI) eased sharply to 0.25 percent year on year in October, which is down from 1.4 percent in September. In November it was slightly up at 0.71 percent. Monthly inflation shows a steady cooling trend easing from 4.26 percent at the start of the year to a low of 0.25 percent, before inching up slightly to 0.71 percent in the latest reading. This decline was largely driven by continued deflation in food and beverages, along with some softening in core inflation.
Share Market
The Sensex began 2025 at 78265 on January 1 and saw a rollercoaster of movements throughout the year. It climbed to peaks above 85000 in November this year but also faced sharp declines falling to around 71449 in early April. By December 10 the index had recovered to 84391 points, reflecting a rebound from mid year lows, though still slightly below its November highs. Overall the year was marked by notable volatility with periods of strong gains interspersed with significant drops.
Read More:
