India's Economy to Surge 7.4% in 2025: UN Report Cites Reforms, Spending
Overview
India's economy is projected to grow by 7.4% in 2025, maintaining its status as a top global performer, according to the United Nations. The UN's World Economic Situation and Prospects 2026 report credits strong private consumption, tax reforms, monetary easing, and substantial government spending on infrastructure, defense, digitalization, and renewables for this robust outlook. However, new tariffs and trade policy uncertainties pose near-term risks.
India's Growth Trajectory
India's economy is forecast to expand by a robust 7.4% in 2025, solidifying its position as one of the world's fastest-growing major economies, according to the United Nations' latest World Economic Situation and Prospects 2026 report. This projection aligns closely with advance estimates from India's Ministry of Statistics and Programme Implementation (MoSPI) for fiscal year 2025-26.
Drivers of Expansion
The UN attributes this strong growth momentum to several key factors. Resilient private consumption and exports, which saw some front-loading last year, are major contributors. Crucially, domestic policy initiatives including significant tax reforms and monetary policy easing have bolstered economic activity. Government expenditure remains a powerful engine, with substantial investments channeled into infrastructure, defense, digitalization, and renewable energy projects. These outlays are boosting fixed capital formation across the nation.
Moderation and Risks
Looking ahead, the UN anticipates a slight moderation in India's growth pace. Economic expansion is projected to ease to 6.6% in 2026, followed by a marginal increase to 6.7% in 2027. A key headwind identified is the impact of new tariffs, which are expected to soften export performance next year, although the report suggests major export segments may remain largely insulated. Trade policy uncertainty, influenced by geopolitical tensions and inward-looking policies globally, presents the primary near-term risk. The UN report emphasized the need for deeper global coordination to navigate these challenges.
