India is set to assert its dominance on the global economic stage, maintaining its position as the fastest-growing large economy for the next two fiscal years. According to the World Bank’s January 2025 Global Economic Prospects (GEP) report, India is projected to grow at a robust 6.7% in FY26 and FY27. This growth rate stands in stark contrast to global growth, which is expected to remain at a modest 2.7%, and even surpasses its closest competitor, China, which faces a slowdown to 4%.
The report attributes India’s economic momentum to the burgeoning services sector, strengthened manufacturing activities, and transformative government policies such as the PM GatiShakti National Master Plan and Startup India. These initiatives are fostering infrastructure development, innovation, and a more conducive environment for investment, ensuring sustained growth across sectors.
Strong Economic Fundamentals Amid Global Challenges
The International Monetary Fund (IMF) corroborates the World Bank’s outlook, forecasting stable growth of 6.5% for India in 2025 and 2026. Despite global uncertainties, India’s economic fundamentals remain resilient, buoyed by private consumption, an improving labor market, and favorable inflation conditions. Investments are also on the rise, supported by strong corporate balance sheets and improved financing options.
Key Drivers of Growth
- Services and Manufacturing: Services remain the backbone of India’s economy, while government-led improvements in logistics and tax reforms are revitalizing manufacturing.
- Private Consumption: Increased consumer spending, driven by stronger employment rates and better credit access, is expected to fuel demand.
- Infrastructure Investments: Programs like the Production Linked Incentive (PLI) Scheme are bolstering the manufacturing base, further positioning India as a global economic hub.
India’s economic resilience is reflected in its ability to outpace other emerging markets and developing economies (EMDEs), which collectively contribute 45% of the global GDP today, compared to just 25% in 2000.
India’s Vision for Global Leadership
The GEP report highlights how India’s forward-thinking governance and reforms have positioned the country as a cornerstone of global stability. Infrastructure development under the PM GatiShakti plan, coupled with the unified Goods and Services Tax (GST), exemplifies the country’s commitment to creating a robust, self-reliant economy.
India’s role as a leader among EMDEs is underscored by its contribution, alongside China and Brazil, to 60% of global economic growth since 2000.
Outlook and Conclusion
India’s steady growth trajectory is a testament to its strategic governance and innovative reforms. As the fastest-growing major economy, India is not only outpacing global peers but also shaping the future of the global economic order. By investing in digital transformation, infrastructure, and policy-driven inclusivity, the nation is set to redefine its role on the world stage.
The January 2025 GEP report marks a pivotal moment in India’s journey, reinforcing its status as a global powerhouse driven by ambition, resilience, and strategic vision.
