Who would have thought at the beginning of this year that the US would impose a bigger tariff hike on India compared with China? Or that, despite the tariff blow, India’s growth would surpass expectations, at 8% on average in the first half of this fiscal, and an estimated 7% in for the full fiscal?

Yet, that’s how 2025 has panned out.

Sure, the economy hasn’t been unscathed. Financial conditions, though in the comfortable zone, have tightened despite the Reserve Bank of India’s (RBI) policy rate cuts as foreign portfolio investors exited on global cues. Global financial market nervousness also sent the rupee nosediving to $90 despite strong domestic macro fundamentals and India’s low dollar liabilities.

But a mix of well-coordinated policy action, a cyclical turn, and good luck from cl

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