Structured growth signals take-off

INDIA’S growth story is no longer only about recovery or cyclical momentum. It is now moving into a more substantive phase, where expansion is being driven by stronger fundamentals, wider participation and greater policy clarity. The latest data for the July to September quarter places real GDP growth at 8.2 per cent year-on-year, with 8 per cent growth for the first half of FY 2025–26. These numbers are not only impressive by global standards; they are significant because they reflect underlying economic stability rather than a one-off surge.

India is today counted by the government as the fourth-largest economy in the world, and most international forecasts suggest that it will soon overtake Japan in nominal GDP. Several projections indicate that by 2030, India could become the world’s third-largest economy, potentially crossing USD 7.3 trillion. Whether that exact milestone is reached on schedule matters less than the direction of travel. The economic base is widening, and resilience is becoming a structural feature rather than a temporary cushion.

A key driver of this phase is inflation stability. The Consumer Price Index fell to just 0.25 per cent in October 2025 — the lowest recorded in the current CPI series. That moderation was not accidental. It was driven by easing food prices across major commodities and recent tax reductions on essential consumer goods. Importantly, prices softened simultaneously in both rural and urban regions. Rural inflation dipped into negative territory, while urban inflation remained under 1 per cent. This consistency indicates broad-based price moderation, reinforcing both household consumption and business confidence.

The Wholesale Price Index also declined year-on-year, with food prices falling further. As a result, both consumers and firms now enjoy improved purchasing power. The RBI maintained a neutral monetary policy stance with the repo rate steady at 5.50 per cent — an important signal that the economy can now grow without pressure from rising interest rates. Stable inflation and moderate borrowing costs give the private sector space to invest rather than simply manage risk.

Industrial production also shows strength across multiple categories. The Index of Industrial Production rose 4.0 per cent year-on-year in September, led by 4.8 per cent growth in manufacturing, which remains the backbone of employment and value addition. Sectors such as basic metals, electrical equipment and motor vehicles recorded double-digit expansion. Infrastructure and construction goods — indicators of investment appetite — grew by 10.5 per cent, while consumer durables increased by 10.2 per cent, pointing to renewed confidence among buyers. In earlier years, industry often depended on one strong segment to sustain growth. Today, performance appears more balanced across sectors.

The labour market has also recorded important improvements. The Labour Force Participation Rate rose to 55.4 per cent in October, marking a six-month high. Female participation touched 34.2 per cent, its highest since May 2025. White-collar hiring is growing steadily. The Naukri JobSpeak Index rose 10.1 per cent year-on-year, with a remarkable 61 per cent surge in demand for AI and machine-learning roles, alongside a 15 per cent rise in fresher hiring. Unemployment remained stable at 5.2 per cent. Meanwhile, the number of net new EPFO subscribers — a proxy for formal employment — crossed 2.1 million in July, showing robust job creation momentum.

Much of this steadying trend is a result of targeted policy measures. The Production Linked Incentive (PLI) Scheme, now covering 14 strategic sectors, has attracted over `1.76 lakh crore in investments. These are not speculative flows but linked to incremental output and export potential. Combined with Make in India, GST reforms, Skill India, Mudra loans and Start-Up India, the policy landscape over the past five years has attempted to build both supply and demand within the domestic market. Importantly, these efforts are converging — investment, job creation and export capacity are now reinforcing each other rather than operating in isolation.

Trade performance has also been encouraging in a difficult global environment. Between April and October 2025, cumulative exports of goods and services grew 4.84 per cent, reaching nearly USD 492 billion. While merchandise exports rose modestly, services exports — particularly in IT, consulting and business services — grew by 9.75 per cent. Even in manufacturing exports, maritime products, electronics, cereals and dairy items performed well despite disruptions. The picture is not perfect, but it is resilient — especially when contrasted with declining exports globally across many advanced economies.

Part of this resilience comes from timely policy support. Exporters now have 15 months to realise their overseas earnings, and shipment deadlines have been extended from one to three years. The government has further launched a `20,000-crore credit guarantee scheme to support exporters, particularly MSMEs. Meanwhile, a new Export Promotion Mission has been approved with an allocation exceeding `25,000 crore, aimed at leveraging digital tools, improving compliance and streamlining logistics. These developments reflect a shift from reactive relief to proactive capacity-building.

Reforms in indirect taxation deserve special mention. The transition to GST 2.0, featuring a simplified structure of 5 per cent and 18 per cent slabs, has begun with a broader objective: widen compliance, reduce tax disputes and lower consumer costs. Early signs are encouraging. GST collections for October stood at nearly `1.96 lakh crore, a 4.6 per cent rise over last year despite lower rates. That alignment — higher revenue and lower rates — is important, because it strengthens fiscal stability while leaving more disposable income with households and working capital with businesses.

What makes India’s economic moment stand out is not merely the numbers but the pattern. Inflation is falling; borrowing costs are stable; manufacturing output is rising; employment indicators are firming; and exports are sustaining momentum even in a global slowdown. These outcomes suggest that India is beginning to move away from a fragmented growth model toward a more connected economic architecture. The future challenge is no longer only faster growth — it is enduring growth, inclusive growth, and productive growth.

In this next phase, three areas will be decisive. First, technology adoption must be accelerated — not only in IT but across agriculture, healthcare, logistics, retail and urban management. Second, green growth must be made viable through incentives, regulation and industry collaboration. Without stronger recycling, renewable storage and clean manufacturing mechanisms, India risks falling behind emerging global supply chains. Third, productive urbanisation must be prioritised. Cities will continue to power economic growth — but a network of efficient, mid-sized urban centres will be essential for long-term competitiveness. The global context will remain unpredictable. Trade-policy uncertainty, capital reallocation and geopolitical tensions will likely persist. Protectionism may return in new forms. Commodity volatility remains a threat. Yet India now has a more stable platform than before.

The writer is a policy analyst focusing on employment, demographics, and economic development. He writes on the intersections of workforce trends, technology, and industrial policy