India Retains Lead as Fastest-Growing Large Economy, UN Report Finds


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India Retains Lead as Fastest-Growing Large Economy, UN Report Finds
India remains the fastest-growing major economy with 6.3% growth
India remains the fastest-growing major economy with 6.3% growth projected in 2025, according to the United Nations, amid weakening global economic prospects.
India Maintains Top Growth Spot as Global Outlook Dims, Says UN
India is set to remain the fastest-growing large economy in the world, with a projected growth rate of 6.3% for the current fiscal year, according to a mid-year update from the United Nations. The World Economic Situation and Prospects (WESP) report underscores India’s economic resilience even as the global economy faces growing uncertainty.

Steady Expansion Despite Global Slowdown
The UN’s latest assessment, released on Thursday, attributes India’s growth to robust private consumption and sustained public investment. While the growth forecast for 2025 has been revised slightly down from 6.6% to 6.3%, the projection remains well ahead of other major economies. For 2026, growth is expected to rise modestly to 6.4%, still below earlier estimates of 6.7%.

“In a time when global economic prospects are dimming, India’s steady growth remains a bright spot,” said Ingo Pitterle, Senior Economic Affairs Officer at the United Nations.

India’s economic momentum contrasts sharply with the broader international outlook. The global economy is now expected to grow by just 2.4% in 2024, amid what the UN describes as a “precarious moment” shaped by rising trade tensions and ongoing policy uncertainty.

Global Comparison Highlights India’s Performance
India’s projected growth rate of 6.3% outpaces other major economies by a significant margin. According to the WESP report, China is forecast to grow at 4.6%, the United States at 1.6%, the European Union at 1%, Japan at 0.7%, and Germany is expected to see a slight contraction of 0.1%.

Shantanu Mukherjee, Director of the UN’s Economic Analysis and Policy Division, remarked on the shifting global context. “In January this year, we were expecting two years of stable, if subpar growth. Since then, prospects have diminished,” he said during the report’s presentation.

Domestic Demand and Public Investment Drive Growth
The WESP report identifies several factors underpinning India’s economic resilience. Strong domestic consumption, ongoing infrastructure investment, and a growing services export sector are contributing to the country's robust performance.

India’s inflation outlook remains favourable. The report predicts inflation will decline from 4.9% in 2024 to 4.3% in 2025, remaining within the Reserve Bank of India’s target range. Employment levels are stable, although the UN notes the need for improved gender parity in the labour force.

External Pressures and Trade Risks Remain

Despite the positive outlook, the UN cautioned that India could face external challenges, particularly from shifting trade dynamics. Tariff threats from the United States could affect Indian merchandise exports, though sectors such as pharmaceuticals, electronics, semiconductors, and copper remain shielded for now.

These concerns reflect broader geopolitical and economic risks that could influence India’s external sector in the near term.

Capital Markets and Manufacturing Sustain Momentum
India’s economic strength has also been reflected in its capital markets, which reached record highs in late 2024. Retail investor participation has surged, and primary market activity has expanded, with initial public offerings (IPOs) rising by over 30% year-on-year. India now accounts for 30% of global IPO listings, up from 17% in 2023.

In manufacturing, the sector’s Gross Value Added (GVA) at constant prices rose from ₹15.6 lakh crore in 2013–14 to ₹27.5 lakh crore in 2023–24, supported by policy measures and resilient supply chains.

Exports and Defence Sector Break Records
India’s total exports rose to an all-time high of USD 824.9 billion in 2024–25, driven by strong growth in services and non-petroleum merchandise exports. Services exports alone climbed 13.6% year-on-year, reaching USD 387.5 billion.

The defence sector has seen particularly strong growth. Indigenous production rose to ₹1,27,434 crore in 2023–24—a 174% increase since 2014–15—while exports grew more than thirtyfold over the past decade. Indian defence products are now exported to nearly 100 countries, underscoring India’s growing role as a global strategic supplier.

IMF Outlook Closely Aligns
The International Monetary Fund (IMF) recently issued a similar forecast, projecting India’s growth at 6.2% for 2025 and 6.3% for 2026. This alignment with the UN’s outlook reinforces India’s role as a key contributor to global economic growth.

Context: India’s Global Economic Role

India, currently the world’s fifth-largest economy, has increasingly positioned itself as a central player in global economic dynamics. The country’s stable macroeconomic environment, expanding middle class, and digital infrastructure growth have supported long-term development.

Policy initiatives focused on self-reliance, including the "Atmanirbhar Bharat" programme, have further boosted domestic production, particularly in strategic sectors like defence and electronics.

As global economic uncertainty persists, India’s broad-based growth—anchored in strong fundamentals and policy-driven reforms—offers a degree of stability to international markets and institutions.

Conclusion
While global economic prospects continue to weaken, India’s sustained growth trajectory highlights its rising significance in shaping the world’s economic future. Backed by steady consumption, strong public investment, and robust exports, India remains a rare source of momentum in an otherwise slowing global economy.
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