India's Economy Grows 7.1%, Fastest Among Major Economies

India's GDP expanded 7.1% year-over-year in the October-December quarter of fiscal year 2025-26, comfortably beating consensus estimates of 6.5% and outpacing every other major economy. The growth was driven by a boom in services, robust government capital expenditure, and a revival in manufacturing.

Gross fixed capital formation — a proxy for investment — grew 9.3%, reflecting the government's aggressive push to build infrastructure ahead of India's ambition to become a $5 trillion economy. The services sector, which contributes over 50% of GDP, expanded 8.2%.

Foreign institutional investors poured a net $12.4 billion into Indian equities in Q3, the highest quarterly inflow on record, as global funds diversified away from China. The Nifty 50 index has gained 14% over the past six months.

The Reserve Bank of India held its repo rate steady at 6.50% last week, with Governor Shaktikanta Das noting that "growth momentum remains strong" while flagging food inflation as a risk. Most economists expect the first rate cut in April.

"India is the structural growth story of the decade," said Priya Sharma, emerging markets analyst. "The combination of favorable demographics, digital infrastructure, and manufacturing incentives creates a compelling case for sustained 7%+ growth."