(GIST OF YOJANA) Rising GDP: Charting India’s Growth Story

GIST OF YOJANA : Rising GDP: Charting India’s Growth Story

DECEMBER-2025

Rising GDP: Charting India’s Growth Story

Context:

India’s economy is growing robustly, with a GDP increase of 6.5% in FY 2024-25 and a projected acceleration to 7.8% in Q1 of FY 2025-26, making it the fastest-growing major economy globally. This growth is attributed to strategic reforms, demographic advantages, and supportive policy initiatives. The government’s vision of Viksit Bharat@2047 focuses on economic prosperity, inclusive growth, social advancement, environmental sustainability, and effective governance to foster continued national development.

Domestic Consumption and Demographic Dividend:

India’s economic growth is driven by private consumption, which accounts for nearly 60% of GDP, supported by rising incomes and digital platforms.
The digital revolution enhances access, particularly in tier-2 and tier-3 cities, as evidenced by strong GST collections during festive seasons.
Additionally, India has a favorable demographic profile, with over 65% of the population under 35 and a growing workforce, projected to reach 1 billion by 2047.
Increased female labor participation and initiatives like Pradhan Mantri Kaushal Vikas Yojana are contributing to employability and productivity.

Exports: Gateway to Global Markets

India’s export growth, driven by services and electronic goods, particularly mobile phones under initiatives like Make in India, highlights its increasing competitiveness in global markets, with merchandise exports reaching $374.1 billion.
However, challenges such as infrastructure issues, high financial costs, and skill gaps could hinder further growth. Strengthening export capabilities requires innovation, better quality, and enhanced supply chain integration, alongside investment in R&D and market diversification.
Energy security remains critical, as India relies on imports for over 88% of its crude oil needs, necessitating a transition to renewable energy sources to bolster resilience and sustain industrial growth.

Manufacturing and Industrial Reforms

India’s manufacturing sector currently accounts for approximately 17% of GDP, with a goal of increasing this to 25% by 2030, supported by the Make in India initiative and PLI schemes.
Electronics manufacturing has notably grown, positioning India as a competitive hub for production, alongside increased foreign direct investment.
However, challenges remain, including poor infrastructure, high energy costs, and complex regulations that discourage investment. Issues such as limited access to finance, a shortage of skilled labor, and slow technology adoption restrict productivity.
To enhance the manufacturing ecosystem, improvements in skill development, infrastructure connectivity, and linkages between large industries and MSMEs are essential, alongside facilitating technology transfer and promoting sustainable manufacturing practices.

GST and the Formalisation of the Economy

The Goods and Services Tax (GST) has streamlined India’s tax system by integrating various levies into a single framework, thus facilitating a national market.
It has enhanced tax transparency, logistics efficiency, and overall ease of doing business, while improving revenue collection through better compliance measures such as AI-based audits and e-invoicing.
Future enhancements could include rate rationalisation, broader sector coverage, and ongoing technological upgrades, alongside strengthening taxpayer education and digital support for small businesses to boost formal economy participation and improve tax-to-GDP ratios.

Way ahead:

India’s growth is fueled by rising consumption, demographic benefits, infrastructure enhancements, and digital transformation. Key measures for sustaining this growth include improving human capital through quality education and healthcare, fostering resilient and inclusive cities, expanding manufacturing capacity, and enhancing financial inclusion.

Conclusion:

Furthermore, it is vital to align growth with environmental sustainability by utilizing renewable energy, climate-resilient infrastructure, and sustainable resource management. Meeting development goals necessitates a balance between growth and inclusive development while reinforcing foundational institutions.