If you look at India’s economy in 2025 from 30,000 feet, the story reads like a policy-maker’s dream: growth stayed strong even as the global mood turned cautious, and inflation—India’s recurring political and economic fault line—fell sharply below the 4% target for long stretches. The RBI’s own bulletin described momentum holding up into November, helped by consumption and supportive policy, with the July–September quarter clocking 8.2% growth—its fastest in six quarters. (Reuters) And on prices, the official CPI print for November 2025 was just 0.71% year-on-year, still remarkably low by India’s recent standards. (Stats and Programme Ministry) This gave the central bank room to cut rates—taking the repo down to 5.25% in December and signalling confidence that inflation risks are contained. (ICRA)
But an economy is not only its headline numbers. The lived experience of 2025 has been far more uneven: India increasingly looks like a country where the macro is stable while the distribution is brittle. That contradiction is exactly what inequality research has been warning about. The World Inequality Report 2026 notes that in India the top 1% own about 40.1% of personal wealth (for 2025), a concentration that should make any democracy nervous—not because growth is “bad,” but because growth that doesn’t broaden can quietly corrode legitimacy. (World Inequality Report 2026) Related work by World Inequality Lab researchers finds that by 2022–23, India’s top 1% income share (22.6%) and wealth share (40.1%) were at their highest historical levels—while also flagging how contested and imperfect parts of India’s underlying data ecosystem have become. (WID – World Inequality Database) In other words: the direction of the trend is hard to ignore even when the measurement debates continue.
The machinery behind the “good macro” is familiar by now. Public capex has remained a central plank—Budget 2025–26 again emphasised capital spending and support for states’ capex, reflecting the state’s continuing role as demand-engine when private investment is selective. (PRS Legislative Research) Meanwhile, the easing cycle helped interest-sensitive sectors: housing affordability, for instance, benefited from lower borrowing costs as rates moved down over the year. (The Economic Times) And on the external side, the current account deficit stayed within a manageable band—RBI data showed it moderating to $12.3 billion in the July–September 2025 quarter (Q2 FY26). (The Indian Express)
Yet 2025 also exposed where India’s strengths are turning into new vulnerabilities. The rupee’s slide and the RBI’s heavy intervention (net selling dollars in size) is a reminder that even a “strong domestic story” can be buffeted by global capital cycles and import bills—especially when markets sense one-way pressure. (Reuters) At home, bond markets have shown discomfort with supply: large, clustered state and PSU borrowings have pushed yields up even after rate cuts, signalling that financial conditions are not only about the policy rate—they’re also about borrowing appetite and investor capacity. (Reuters) If you want the simplest translation: 2025’s macro stability has been achieved, but it is not costless; it requires constant balancing—between growth support and market discipline, between currency stability and reserve firepower, between fiscal ambition and debt comfort.
Which brings us back to the year’s central tension: India can post enviable growth and low inflation and still feel economically anxious as a society. Inequality is not just a moral issue; it is an efficiency issue. When wealth and income gains concentrate, demand becomes narrower, aspiration becomes more positional, and politics becomes more identity- and transfer-driven—less about productivity bargains and more about zero-sum distribution fights. This is why the inequality story is not a side note to the growth story—it is the growth story’s sustainability clause. And it is also why jobs and wages sit at the heart of the 2026 agenda. Growth led by capex and formal credit is valuable, but unless it consistently converts into broad-based wage growth—especially for the bottom half and for women entering (and staying in) the workforce—India risks normalising a “K-shaped” economy where the top thrives and the median merely copes.
So, how has 2025 been for the Indian economy? Successful by the scoreboard that markets and macroeconomists track—growth resilience, inflation control, policy credibility. (Reuters) But incomplete, even precarious, by the scoreboard that democracies ultimately live or die by—broad prosperity, economic dignity, and a sense that the future is not being privately auctioned to those already ahead. (World Inequality Report 2026) The real test of 2026 will not be whether India can grow—it likely can—but whether it can widen the lane: better jobs, better human capital outcomes, and a distribution of gains that makes the macro success politically and socially durable.
Indian Political Debate 