Photo Credit: PMO India
Delivering his Independence Day address from the Red Fort, Prime Minister Narendra Modi projected confidence in India’s economic trajectory, underlining robust growth, easing inflation, resilient markets, and forthcoming reforms designed to empower citizens and businesses alike.
“Macroeconomic indicators are showing an upward trajectory, global rating agencies also constantly praise India, expressing more and more confidence in the Indian economy. Today inflation is under control, our forex exchange reserves are very strong. The country is moving at a fast pace towards becoming the third largest economy,” PM Modi told the nation.
The Prime Minister announced that a new GST reform will take effect in October 2025, aimed at reducing the financial burden on households and boosting small businesses. “Over the past eight years, we have undertaken a major reform in GST and reduced the tax burden across the country. MSMEs would benefit and it will also empower the economy,” he said.
Strong GDP Growth and Expanding Economy
India’s economy grew by 6.5% in 2024–25, with GDP rising to ₹187.97 lakh crore (US$ 2.20 trillion) from ₹176.51 lakh crore the previous year. The final quarter of FY25 recorded 7.4% growth, signaling a robust end to the fiscal year. Both the Reserve Bank of India and global agencies project India will sustain this pace, positioning it to become the world’s third-largest economy by 2030, with GDP projected at $7.3 trillion.
Domestic demand, rising investments, and strong consumption patterns have anchored this momentum, while steady reforms continue to improve efficiency and competitiveness.
GST Reform and Tax Expansion
The Goods and Services Tax (GST), which completed eight years in July 2025, has become a cornerstone of fiscal transparency and integration. With 1.52 crore active GST registrations, half of them concentrated in the top five states, the upcoming reform in October is expected to simplify compliance, expand coverage, and increase affordability.
Analysts believe the restructuring could provide a major boost to consumption and strengthen revenues, aligning with PM’s emphasis on empowering MSMEs and reducing the tax burden on common citizens.
Capital Expenditure and Investment Push
Public investment has been central to India’s growth drive. In 2024–25, capital expenditure touched ₹10.52 trillion, surpassing revised estimates. The ratio of capital to revenue expenditure remained above 0.27 for three straight years, nearly double pre-pandemic levels.
Such investments are not only modernizing infrastructure but also generating employment, raising productivity, and strengthening the foundation for long-term revenue growth.
Inflation at Multi-Year Lows
A major highlight in PM’s address was India’s success in containing inflation. Retail inflation (CPI) eased to 1.55% in July 2025, the lowest since 2017. Food inflation fell into negative territory at –1.76%, marking the sharpest decline in over six years.
Wholesale inflation (WPI) also remained subdued, with falling fuel and commodity prices reinforcing the easing trend. Economists expect this to sustain household purchasing power and provide room for policy support in the coming months.
Jobs and Labour Market Gains
The Prime Minister pointed to job creation as a central outcome of reforms and investments. Over the past decade, India has generated 17 crore jobs, with the Labour Force Participation Rate rising from 49.8% in 2017–18 to 60.1% in 2023–24.
The Unemployment Rate fell sharply from 6.0% to 3.2% in the same period. While agriculture added jobs steadily, the services sector expanded its share to 36% of total employment, and manufacturing registered a sharp rise, with job creation doubling compared to the previous decade.
Investor Confidence and Market Strength
India’s financial markets reflected growing global confidence. Between mid-June and mid-July 2025, domestic institutional investors purchased equities worth ₹44,269 crore, while foreign institutional investors made net purchases of ₹33,336 crore.
This dual momentum highlights India’s ability to attract both local and global capital, with reforms and a stable macroeconomic environment bolstering investor sentiment.
External Trade and Global Position
India’s external sector also showed resilience. The country recorded a current account surplus of USD 13.5 billion in Q4 FY25, a sharp reversal from the previous quarter’s deficit. For the full year, the current account deficit narrowed to just 0.6% of GDP, signaling improved trade balance and healthy remittance flows.
Exports of goods and services rose by 5.9% year-on-year in Q1 FY26, reaching USD 210.3 billion. Export orders surged in June as businesses advanced shipments ahead of anticipated higher U.S. tariffs, demonstrating India’s adaptability amid shifting global trade dynamics.
Outlook: Balancing Growth with Challenges
While the global environment remains uncertain, including risks from rising U.S. tariffs and volatile commodity prices, Modi stressed that India’s strong fundamentals and prudent policies provide a solid cushion. With inflation at historic lows, fiscal reforms in motion, and capital spending at record levels, India is positioned to sustain its high-growth path.
“India’s growth momentum is buoyed by strong domestic growth drivers, sound macroeconomic fundamentals and prudent policies. Manufacturing, services, and infrastructure are advancing on the back of steady investment and policy support,” the Prime Minister concluded.
