IMF Executive Board Concludes 2025 Article IV Consultation with India

IMF News, November 26, 2025

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Bibliographic details

• Published: November 26, 2025

Overview

• The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for India. The authorities have consented to the publication of the Staff Report prepared for this consultation.
• Press Release No. 25/392; press release dated November 26, 2025. Media contact: PRESS OFFICER: Randa Elnagar, Phone: +1 202 623-7100, Email: MEDIA@IMF.org.

Recent performance and resilience

• Real GDP growth: 6.5 percent in FY2024/25; expanded by 7.8 percent in Q1 FY2025/26.
• Headline inflation: declined markedly, driven by subdued food prices.
• Financial and corporate sectors: remained resilient, supported by adequate capital buffers and multi-year low non-performing assets.
• Fiscal consolidation: has advanced.
• Current account deficit: contained, supported by resilient service exports.

Near-term outlook and baseline projection

• Baseline assumption: prolonged 50 percent U.S. tariffs.
• Real GDP projection: 6.6 percent in FY2025/26; 6.2 percent in FY2026/27.
• Headline inflation projection: projected to remain well contained, reflecting the one-off effect of the GST reform and continued benign food prices.
• GST reform: reform and resulting reduction in the effective rate expected to help cushion adverse impact of tariffs.
• Long-run ambition: advancing comprehensive structural reforms needed to support India’s ambition to become an advanced economy.

Risks and upside scenarios

• Upside: conclusion of new trade agreements and faster implementation of structural reforms could boost exports, private investment, and employment.
• Downside: further deepening of geoeconomic fragmentation could lead to tighter financial conditions, higher input costs, and lower trade, FDI, and economic growth.
• Other risks: unpredictable weather shocks could affect crop yields, adversely impact rural consumption, and reignite inflationary pressures.

Executive Board assessment and recommendations

• Directors commended India’s very strong economic performance and resilience, noting benefits from sound macroeconomic policies and reforms.
• Fiscal policy:
  • Directors concurred with authorities’ plans for continued fiscal consolidation this year; achievement of the fiscal deficit target will require strong spending discipline.
  • Welcome for recent simplification of GST; called for careful monitoring of the fiscal impact of the reduction in GST and personal income tax rates.
  • Tariff relief measures should be targeted, transparent, and timebound.
  • Pace of fiscal consolidation in FY2026/27 should be conditional on the impact of tariffs on the output gap.
  • For the medium term, fiscal buffers should be replenished by focusing on domestic revenue mobilization and raising efficiency of expenditure, including through a more targeted social safety net.
  • Directors generally encouraged the authorities to review their medium term debt target in light of the GDP rebasing next year, with a view to making it more ambitious.
  • Enhancing fiscal sustainability at the state level and carefully monitoring contingent liabilities would be important.
• Monetary policy:
  • Directors supported the RBI’s data dependent approach to monetary policy.
  • If tariffs persist at current levels, there would likely be scope for further monetary easing amid benign inflation dynamics.
  • Recommended continued efforts to enhance monetary transmission and greater exchange rate flexibility, with interventions aimed at addressing disorderly market conditions consistent with the Integrated Policy Framework.
• Financial sector:
  • India’s financial system is sound, supported by strong capital and liquidity positions.
  • Authorities encouraged to mitigate vulnerabilities among nonbank financial institutions and cautiously monitor risks from concentration and rising financial sector interconnectedness.
  • Further progress on financial structural reforms encouraged, in line with the 2024 FSAP and FATF recommendations.
• Structural reforms:
  • Comprehensive structural reforms are critical to support economic development.
  • Directors welcomed recent labor market reforms and encouraged enhanced human capital and female labor force participation, continuation of the public investment push, and strengthening the business environment.
  • Deepening trade integration to bolster competitiveness and attract FDI; investment in R&D and fostering innovation to support productivity-driven development.
  • Advancing the green transition supported by greater access to concessional financing highlighted as important.
  • Further enhancements in data quality noted as valuable.

Key statistics (selected from Table 1: India: Selected Social and Economic Indicators, 2021/22-2026/27)

• Real GDP (at market prices), growth (in percent): 2021/22: 9.7; 2022/23: 7.6; 2023/24: 9.2; 2024/25: 6.5; 2025/26: 6.6; 2026/27: 6.2.
• Consumer prices - Combined (percent change, period average): 2021/22: 5.5; 2022/23: 6.7; 2023/24: 5.4; 2024/25: 4.6; 2025/26: 2.8; 2026/27: 4.0.
• Gross saving (percent of GDP): 2021/22: 30.9; 2022/23: 31.6; 2023/24: 32.6; 2024/25: 32.3; 2025/26: 31.5.
• Gross investment (percent of GDP): 2021/22: 32.1; 2022/23: 33.6; 2023/24: 33.4; 2024/25: 32.9; 2025/26: 32.5; 2026/27: 32.4.
• Central government overall balance (percent of GDP): 2021/22: -6.7; 2022/23: -6.6; 2023/24: -5.5; 2024/25: -4.9; 2025/26: -4.5.
• General government overall balance (percent of GDP): 2021/22: -9.4; 2022/23: -9.0; 2023/24: -8.1; 2024/25: -7.9; 2025/26: -7.1; 2026/27: -7.2.
• General government debt (percent of GDP): 2021/22: 83.5; 2022/23: 82.2; 2023/24: 80.7; 2024/25: 81.6; 2025/26: 81.1.
• Broad money (y/y percent change, end-period): 2021/22: 8.8; 2022/23: 9.0; 2023/24: 11.6; 2024/25: 9.4; 2025/26: 9.3; 2026/27: 9.6.
• Domestic credit (y/y percent change, end-period): 2021/22: 8.4; 2022/23: 13.1; 2023/24: 14.9; 2024/25: 11.9; 2025/26: 10.8; 2026/27: 10.0.
• 10-year government bond yield (end-period): 2021/22: 6.9; 2022/23: 7.3; 2023/24: 7.1.
• Merchandise exports (in billions of U.S. dollars): 2021/22: 429.2; 2022/23: 456.1; 2023/24: 441.4; 2024/25: 441.8; 2025/26: 416.3; 2026/27: 409.5.
• Merchandise imports (in billions of U.S. dollars): 2021/22: 618.6; 2022/23: 721.4; 2023/24: 686.4; 2024/25: 729.0; 2025/26: 746.6; 2026/27: 782.6.
• Current account balance (in billions of U.S. dollars): 2021/22: -38.7; 2022/23: -67.0; 2023/24: -26.0; 2024/25: -23.3; 2025/26: -41.4; 2026/27: -63.5.
• Current account balance (percent of GDP): 2021/22: -1.2; 2022/23: -2.0; 2023/24: -0.7; 2024/25: -0.6; 2025/26: -1.0; 2026/27: -1.4.
• Foreign direct investment, net ("-" signifies inflow, in billions of U.S. dollars): 2021/22: -38.6; 2022/23: -28.0; 2023/24: -10.2; 2024/25: -10.1; 2025/26: -15.5.
• Portfolio investment, net (equity and debt, "-" = inflow, in billions of U.S. dollars): 2021/22: 16.8; 2022/23: 5.2; 2023/24: -44.1; 2024/25: -3.6; 2025/26: -14.9; 2026/27: -21.6.
• Overall balance (in billions of U.S. dollars): 2021/22: 47.5; 2022/23: -9.1; 2023/24: 63.7; 2024/25: -5.0; 2025/26: 16.0; 2026/27: 23.8.
• Gross reserves (in billions of U.S. dollars, end-period): 2021/22: 607.3; 2022/23: 578.4; 2023/24: 646.4; 2024/25: 668.3; 2025/26: 709.6; 2026/27: 733.4.
• Months of next year's imports (goods and services): 2021/22: 8.1; 2022/23: 8.0; 2023/24: 8.2.
• External debt (in billions of U.S. dollars, end-period): 2021/22: 619.1; 2022/23: 623.9; 2023/24: 668.8; 2024/25: 736.3; 2025/26: 791.0; 2026/27: 856.3.
• External debt (percent of GDP, end-period): 2021/22: 19.5; 2022/23: 18.6; 2023/24: 18.4; 2024/25: 18.8; 2025/26: 19.2; 2026/27: 19.0.
• Ratio of gross reserves to short-term debt (end-period): 2021/22: 4.2; 2022/23: 3.9; 2023/24: 3.7.
• Real effective exchange rate (annual avg. percent change): 2021/22: 0.4; 2022/23: -0.2; 2023/24: 0.2; 2024/25: 1.2.
• Memorandum item: Fiscal balance under authorities' definition: 2021/22: -6.5; 2022/23: -4.4.

Sources: Data provided by the Indian authorities; Haver Analytics; CEIC Data Company Ltd; Bloomberg L.P.; World Bank, World Development Indicators; and IMF staff estimates and projections.

IMF Executive Board press release, November 26, 2025.

References

• Republic of San Marino and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• http://www.imf.org/India
• http://www.IMF.org/external/np/sec/misc/qualifiers.htm
• https://www.imf.org/en/home