India Defies Global Slowdown with 6.3% Growth
India Defies Global Economic Headwinds, Maintains Strong Growth and Stability: United Nations Assessment
The report describes the current global economic environment
as “fragile and uncertain,” shaped by a convergence of risks that have weakened
growth prospects across both advanced and developing economies. Rising
geopolitical conflicts have disrupted trade routes and supply chains, while
prolonged monetary tightening in major economies has raised borrowing costs and
dampened investment. At the same time, cross-border capital flows have become
increasingly cautious, further constraining growth in several regions.
Against this backdrop, India’s economic performance stands
out not merely for its pace but for its consistency. While many economies are
grappling with deceleration and volatility, India has managed to preserve a
stable growth path anchored in domestic fundamentals.
According to the United Nations assessment, India’s gross
domestic product (GDP) is projected to grow by 6.3 percent in the
current financial year, making it the fastest-growing major economy globally.
The outlook remains stable for the medium term, with growth expected to
increase slightly to 6.4 percent in 2026, indicating continuity rather
than a short-lived or cyclical rebound.
In contrast, the global economy is projected to grow at 2.4 percent, underscoring the depth of the slowdown affecting much of the world. China’s growth is estimated at 4.6 percent, while Japan and the United States are expected to grow at 1.1 percent and 1.6 percent, respectively. These comparisons highlight a widening divergence between India and other major economies, positioning India as a relative outlier in an otherwise subdued global economic landscape.
| Economy | GDP Growth – Current Year (%) | GDP Growth – 2026 (%) | Key Observation |
|---|---|---|---|
| India | 6.3 | 6.4 | Fastest-growing major economy; stable, sustained expansion |
| Global Economy | 2.4 | — | Broad-based slowdown across regions |
| China | 4.6 | — | Moderate growth, slower than India |
| United States | 1.6 | — | Low growth amid mature economic cycle |
| Japan | 1.1 | — | Weak growth reflecting structural constraints |
Global Conditions and the Significance of India’s Performance
The United Nations assessment paints a sobering picture of
the broader global economy. Growth prospects worldwide remain constrained by a
combination of structural weaknesses and cyclical pressures. Elevated interest
rates in many major economies have increased borrowing costs, discouraging
investment and slowing consumption. Trade growth has weakened amid
protectionist tendencies, geopolitical frictions, and logistical disruptions,
while investment flows remain subdued due to persistent uncertainty.
Several advanced economies are experiencing stagnation or
near-stagnation, while many developing economies face limited fiscal space and
rising debt burdens. In this environment, sustaining growth has become
increasingly challenging.
It is within this context that India’s performance assumes greater significance. The report notes that India’s relative insulation from external shocks stems from the size of its domestic market, the composition of its growth drivers, and the continuity of public investment.
Domestic Demand as the Anchor of Economic Stability
A central conclusion of the United Nations report is that
India’s economic resilience is rooted in the strength of domestic demand.
Unlike export-dependent economies that are highly sensitive to fluctuations in
global trade, India benefits from a large internal market that continues to
generate demand even during periods of global stress.
Private consumption has remained broadly stable, supported
by steady income conditions and moderating inflation. Household spending has
not experienced the sharp contractions seen in some other economies, reflecting
both employment stability and contained price pressures.
Government expenditure has played a decisive role in sustaining economic activity. The report highlights that public spending in India has been oriented toward long-term capital formation rather than short-term stimulus measures. This approach has provided durable support to growth while simultaneously strengthening productive capacity.
Infrastructure Investment and Multiplier Effects
Public investment in infrastructure has emerged as a
defining feature of India’s growth strategy. Continued spending on roads,
railways, ports, energy systems, and digital infrastructure has created a
steady pipeline of projects, supporting economic activity across a wide range
of sectors.
Infrastructure spending has generated demand in
construction, steel, cement, and logistics, while also supporting professional
services linked to project planning, execution, and maintenance. These
activities have produced multiplier effects, spreading the impact of public
investment across the broader economy.
Beyond its immediate economic impact, infrastructure development has improved long-term efficiency. Enhanced connectivity and reduced logistical bottlenecks have strengthened productivity and reinforced business confidence, contributing to sustained growth momentum.
Inflation Moderation and Consumption Stability
Inflation dynamics have played an important role in
supporting domestic demand. The United Nations projects India’s inflation rate
to ease to 4.3 percent in 2025, placing it comfortably within the
Reserve Bank of India’s target band of 4 percent ±2 percent.
Moderating inflation has helped preserve household
purchasing power, ensuring that rising prices do not erode consumption. This
stands in contrast to economies where persistent inflation has forced
aggressive monetary tightening, weakening demand and slowing growth.
The report notes that a relatively stable inflation environment has allowed consumption to remain resilient, reinforcing the domestic demand base that underpins overall economic performance.
Employment Stability and Income Continuity
The continuation of economic activity has translated into
relatively stable employment conditions. Sectors such as manufacturing,
construction, services, and defence-related production have continued to
generate employment opportunities, both directly and indirectly.
While labour markets in several economies have come under
pressure amid slowing growth, India’s employment situation has remained
comparatively steady. This stability has supported household incomes and
consumer confidence, preventing a sharp contraction in spending.
The report underscores that employment continuity has been a key factor sustaining domestic demand during a period of global uncertainty.
Capital Markets and Investor Confidence
India’s capital markets have emerged as a clear indicator of
growing confidence in the country’s economic trajectory. Retail investor
participation has expanded rapidly, reflecting deeper household engagement with
financial markets.
The number of retail investors rose from 4.9 crore in FY
2019–20 to 13.2 crore by December 2024, representing an increase of
nearly 170 percent in less than five years. This expansion points to
rising financial inclusion and greater trust in long-term economic prospects.
Primary markets have mirrored this confidence. Between April
and December 2024, the number of initial public offerings (IPOs) increased from
196 to 259, while funds raised surged from ₹53,023 crore to ₹1,53,987
crore.
On the global stage, India accounted for 30 percent of worldwide IPO fundraising in 2024, up sharply from 17 percent in 2023, reinforcing its emergence as a major centre for capital mobilisation.
| Indicator | Earlier Period | Latest Period | Change / Growth |
|---|---|---|---|
| Retail investors | 4.9 crore (FY 2019–20) | 13.2 crore (Dec 2024) | ~170% increase in under 5 years |
| Number of IPOs | 196 (Apr–Dec 2023) | 259 (Apr–Dec 2024) | +63 IPOs |
| Funds raised via IPOs | ₹53,023 crore | ₹1,53,987 crore | Nearly 3× increase |
| Global share of IPO fundraising | 17% (2023) | 30% (2024) | +13 percentage points |
Manufacturing Growth and Structural Depth
India’s manufacturing sector has expanded at a steady and
durable pace. Manufacturing gross value added (GVA) increased from ₹15.6
lakh crore in 2013–14 to an estimated ₹27.5 lakh crore in 2023–24.
Although manufacturing’s share of the overall economy rose
modestly from 17.2 percent to 17.3 percent the report emphasises that
this gradual increase reflects structural strengthening rather than short-term
volatility.
| Indicator | 2013–14 | 2023–24 (Estimated) | Change / Insight |
|---|---|---|---|
| Manufacturing GVA | ₹15.6 lakh crore | ₹27.5 lakh crore | Strong absolute expansion over a decade |
| Manufacturing share of GDP | 17.2% | 17.3% | Marginal rise, indicating stability |
| Nature of growth | — | — | Structural strengthening, not cyclical surge |
| Economic role | — | — | Supports employment, diversification, shock resilience |
Manufacturing has played a stabilising role by supporting employment, diversifying the industrial base, and reducing vulnerability to external shocks.
Export Performance Reaches Record Levels
Exports have become an increasingly important pillar of
India’s growth. Total exports increased from $778.1 billion in 2023–24
to $824.9 billion in 2024–25, marking a new record.
Over a longer horizon, exports have expanded from $466.22
billion in 2013–14, representing nearly 77 percent growth over a
decade.
Services exports led this expansion, rising from $341.1
billion to $387.5 billion, with an annual growth rate of 13.6
percent. In March 2025 alone, services exports reached $35.6 billion,
up 18.6 percent year-on-year.
Merchandise exports excluding petroleum products also touched a record $374.1 billion, registering 6 percent growth over the previous year.
| Indicator | Earlier Period | Latest Period | Growth / Key Insight |
|---|---|---|---|
| Total exports | $778.1 bn (2023–24) | $824.9 bn (2024–25) | Record high; year-on-year increase |
| Total exports (long-term) | $466.22 bn (2013–14) | $824.9 bn (2024–25) | ~77% growth over a decade |
| Services exports | $341.1 bn | $387.5 bn | 13.6% annual growth |
| Services exports (March 2025) | — | $35.6 bn | 18.6% YoY growth |
| Merchandise exports (ex-petroleum) | — | $374.1 bn | Record level; 6% YoY growth |
Defence Manufacturing and Export Transformation
One of the most significant structural shifts highlighted in
the report is the transformation of India’s defence sector. Indigenous defence
production rose from ₹46,429 crore in 2014–15 to ₹1,27,434 crore in
2023–24, reflecting 174 percent growth.
Defence exports expanded even more dramatically, increasing
from ₹686 crore to ₹23,622 crore, a nearly 34-fold rise.
Indian defence products are now exported to close to 100 countries,
strengthening both economic output and export diversification.
| Indicator | 2014–15 | 2023–24 | Growth / Outcome |
|---|---|---|---|
| Indigenous defence production | ₹46,429 crore | ₹1,27,434 crore | ~174% increase |
| Defence exports | ₹686 crore | ₹23,622 crore | Nearly 34-fold rise |
| Export destinations | Limited | ~100 countries | Strong export diversification |
| Economic impact | — | — | Employment generation, industrial capability, external resilience |
The report notes that defence manufacturing has supported employment, industrial capability, and external sector resilience.
India’s Position in a Slowing Global Economy
The United Nations assessment places India among a limited
group of economies that have managed to sustain growth momentum through policy
continuity, strong domestic demand, and sustained public investment.
While many countries continue to face declining investment and weakening demand, India’s internal consumption and government spending have provided a stabilising anchor, allowing the economy to absorb external shocks more effectively.
Conclusion
The United Nations’ mid-year economic review presents India
as an economy that continues to advance despite a challenging global
environment. A projected 6.3 percent growth rate, expected to rise to 6.4
percent, record exports of $824.9 billion, an expanding investor
base of 13.2 crore individuals, steady manufacturing growth, and a 174
percent increase in defence production accompanied by a 34-fold rise in
defence exports collectively illustrate sustained economic momentum.
Taken together, these indicators suggest that India is not
merely weathering global economic pressures but is steadily consolidating its
position as one of the world’s most resilient and dynamic major economies.
