Seven focal areas of action that could sustain India's momentum

A focused mid-term policy agenda for the government and businesses would help keep the economy on a firm growth path

- CHANDRAJIT BANERJEE

As 2025 draws to a close, India finds itself in a position that few large economies can credibly claim.

Among major economies, it remains the fastest growing, underpinned by stronger institutions, improving credibility and a clear national direction.

Economic performance exceeded expectations across fronts. Domestic demand was resilient, supported by steady income growth and improved consumer sentiment. Service exports expanded strongly, reinforcing India’s role in global value chains linked to technology and knowledge services. Manufacturing activity showed a gradual but unmistakable revival, aided by better capacity utilization, improved logistics and rising investment intent. Private investment gathered momentum. Reflecting this broad-based strength, CII has raised its growth projection for 2025-26 to 7.3-7.5% from 6.8-7.0%. This reflects not just cyclical strength, but rising confidence in India’s medium-term growth trajectory.

Macroeconomic stability provided a crucial anchor. Inflation was comfortably below target for much of the year, supported by improved food supply management, better logistics and tax rationalization. Monetary policy responded in a calibrated manner, balancing growth with financial stability. As India enters 2026, its macroeconomic position is one of the strongest in recent years, even as we adjust to a phase where real and nominal growth rates converge.