India logs five straight years above 7% growth, matching 2003-07 BRIC run

Five-year run above 7% matches pre-crisis boom

India may have slipped to sixth in the world’s largest economies by nominal size, but its growth rate continues to defy domestic and global estimates. At 7% plus, India remains the world’s fastest growing major economy, with resilience amid persistent global uncertainties.

Kyunghoon Kim, Head of India & South Asia Team at Korea Institute for International Economic Policy, said India’s growth is set to surpass 7% for the fifth consecutive year.

“India’s economy rebounded by 9.7% in 2021, then grew by more than 7% in each of the next four years. That makes five consecutive years of growth above 7%, matching the 2003–2007 run, when India attracted global attention as one of the BRIC economies,” he said in a thread on X.

Kim noted India’s average annual economic growth between 2021 and 2025 was 7.83%. That is the second-highest five-year average in data going back to 1960, just behind the 7.89% recorded between 2003 and 2007.

India’s economy contracted by 5.8% in 2020 during the pandemic before rebounding with growth of 9.7% in 2021. It then expanded by more than 7% in each of the following four years, according to Kim. If current forecasts hold, India could surpass that record.

Growth on a much larger base

The point of comparison is not just the sharp rebound after the pandemic, but the economy’s ability to sustain rapid growth over several subsequent years on a completely different scale.

“India’s GDP was just over $1 trillion in 2007; now it is nearly $4 trillion. The same 7% growth rate therefore represents a much larger expansion,” Kim said.

At the end of FY2021, India’s nominal GDP was $2.6 trillion. It is projected to be $4.15 trillion at the end of FY2027, an almost 60% rise in just six years despite the pandemic, the Russia-Ukraine war, US trade policy shifts and 50% tariffs, and the ongoing US-Iran war.

Beating estimates amid external shocks

Since 2020, the bounceback has consistently beaten estimates by the International Monetary Fund. The first quarter estimates of 7.8% have beaten all estimates even as India depends on the world for 90% of its crude oil needs and the US-Iran conflict choked a crucial supply passage, the Strait of Hormuz.

Inflation has risen but remains within RBI’s target range. Analysts point to the size of the domestic market, a demographic dividend, key government reforms and proactive monetary policy management by the RBI. Schemes such as the Production Linked Incentive scheme have helped make India a key export hub, especially for electronics.

Upward revisions to forecasts

Kim highlighted recent upward revisions to India’s growth outlook by major institutions. The IMF has raised its growth projection for India in the current year from 6.4% to 7%, following similar upgrades by the World Bank, Asian Development Bank, S&P and Moody’s.

Most international agencies now expect the economy to expand by 6.9% to 7% in the current fiscal year after official figures put GDP growth in Q1 at 7.8%.

The IMF has also endorsed India’s revised approach to calculating gross domestic product, saying the new methodology conforms to sound statistical practices and its own recommendations. Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, called the change a “welcome development”.

In its latest World Economic Outlook, the IMF projects worldwide growth of 3.4% in 2026 and India’s growth at 7% in 2026, reflecting stronger-than-expected momentum supported by resilient domestic demand and robust services activity.

The IMF said: “India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favorable demographic dynamics, a large and expanding domestic market, and continued structural reforms.”

The report drew attention to India’s efforts to broaden trade relationships, citing trade agreements with the UK and the European Union expected to reduce tariffs and ease restrictions on services trade. These arrangements could also “facilitate adjustments to recent trade policy changes”.

Despite sharp rupee depreciation which limited nominal GDP gains in dollar terms, the economy continues to hold strong. As per latest IMF projections, India is expected to become the third largest economy after the US and China by 2031.