Independence Day Special: Uncomplicating Financial Freedom
30-July-2025
12:00 PM
GDP Update: India’s Growth Story Remains Intact
India’s economic momentum continues to defy global uncertainty. The latest GDP data confirms that the country’s growth engine is not only steady but accelerating. With a resilient foundation across key sectors and consistent policy direction, India’s performance reaffirms its position as the world’s fastest-growing major economy.
Q4FY25 Surprises on the Upside
India recorded a robust real GDP growth of 7.4% in Q4FY25, significantly boosted by strong performances in agriculture, construction, and services. This impressive quarter lifted the full-year real GDP growth to 6.5% for FY25, showcasing the strength of domestic demand and targeted infrastructure investments.
FY26 Outlook: Consistency in Growth
India is projected to maintain its momentum with an estimated real GDP growth of 6.6% in FY26. Quarterly expectations remain consistently above 6%, indicating broad-based resilience.
Key Sectoral Growth Projections for FY26
- Agriculture – 4.4% (Supported by a strong monsoon outlook)
- Industry – 6.1% (Led by recovery in mining, manufacturing, and utilities)
- Construction – 8.0% (Driven by continued government infrastructure focus)
- Services – 7.1% (Resilient consumption, exports, and public administration)
Nominal GDP: Scale and Global Ranking
India’s nominal GDP rose by 9.8% in FY25, growing from USD 3.6 trillion in FY24 to USD 3.9 trillion. The economy is now expected to cross USD 4.2 trillion in FY26, overtaking Japan to become the 4th largest global economy.
Yearly Additions to GDP: A Global Perspective
India now adds USD 270–300 billion annually, a scale that exceeds the entire GDP of nations like Greece or New Zealand. This net addition is also equivalent to India’s entire GDP in 1991–92, highlighting the structural depth of growth.
India’s Rising Role in the Global Economy
India’s current share in global GDP is 3.5%, yet it contributes nearly 7% to the annual global GDP increase. The IMF projects this to rise to:
- 5% share of global GDP
- 9% contribution to yearly global growth over the next five years
This shift reflects the long-term compounding of domestic investments, consumption strength, and policy consistency.
What It Means for Equity Markets
With expected nominal GDP growth of 10–11% in FY26, the Nifty 50 is likely to deliver 11–12% returns over the medium term. Historically, equity performance in India has closely tracked nominal GDP trends.
Strategic Takeaway
Investors are advised to stay aligned with the 65:35:20 strategy allocation.
- If already aligned, no changes are needed.
- For new allocations, invest in line with the strategy to fill gaps and remain focused on long-term wealth goals.
FAQs
India’s growth was led by agriculture, construction, and services, supported by infrastructure investments, rural demand recovery, and stable inflation.
FY25 closed with a 6.5% real GDP growth, and FY26 is projected at 6.6%, with continued strength across sectors like construction, financial services, and trade.
India’s nominal GDP is set to reach USD 4.2 trillion in FY26, overtaking Japan. Annual additions of USD 270–300 billion exceed the GDP of several advanced economies.
According to the IMF, India’s share in global GDP is expected to rise from 3.5% to 5%, with a 9% contribution to global annual growth.
Nominal GDP and equity returns are historically aligned. With projected GDP growth at 10–11%, staying aligned with the 65:35:20 strategy is key for medium-term wealth creation.
This Raksha Bandhan, Secure the Wealth That Supports Your Family
30-July-2025
12:00 PM