The trouble with India's feel-good GDP numbers

Summary: India’s headline GDP growth paints a reassuring picture, but low nominal growth tells a different story for incomes and consumption. With rural earnings under pressure and investment engines misfiring, the risk is that feel-good numbers breed policy complacency just when deeper reforms are needed. The Reserve Bank of India (RBI) Governor Sanjay Malhotra has described the Indian economy as being in a ‘Goldilocks’ phase, given inflation is low and GDP growth is high. He can afford to give himself a pat on the back. In the April-December 2025 period, consumer price inflation (CPI) has averaged 1.7 per cent. The official advance estimate for real GDP growth in the financial year 2025-26 is a decent 7.4 per cent. Just a shade under 7.5 per cent will be a remarkable feat, given the rest of the world is in tumult and although there’s a quarter to go still before the financial year end. A lot can and does tend to change these days very quickly. Global economic conditions remain unpredictable and volatile. President Donald Trump has threatened to raise tariffs on exports to the US to 500 per cent. He has also spoken of a fresh penalty of 25 per cent tariffs on exports to the US from countries that engage with Iran. If the White House imposes that, the total tariff on Indian exports to the US will go

This article was originally published on February 01, 2026.