Domestic demand fuelled India's growth momentum in 2025, catalysed by the Union Throughout 2025, the government maintained a strong emphasis on capital Budget 2025-26's landmark income tax reforms and the subsequent GST 2.0 high growth and record-low inflation. Real GDP is estimated to have expanded by expenditure to bridge investment gaps and modernise national infrastructure. 7.4% in FY2026 (revised to 7.6% in February 2026)], catalysed by a 9.3% surge in the rationalisation. By raising the effective zero-tax threshold to INR 12 lakh (inclusive of The public capex outlay for FY2026 reached ~INR 11.2 lakh crore, with funds services sector2 and 7.0% growth across manufacturing and construction3. This directed towards the creation of productive assets. resilience persisted despite a volatile global backdrop and structural softness in the significantly boosting middle-class disposable income7. The GST 2.0 regime further This sustained capex push, representing nearly 3.1% of GDP5, served as a key Indian rupee, which depreciated by ~4% during 2025. Although announcements catalyst for the construction sector's robust performance during the year. By linked to the U.S.-ndia trade deal briefly strengthened the INR to 90 against the and mass-market goods to the 5% slab (down from 12% and 18%)8. Consequently, the enhancing multi-modal connectivity under the PM Gati Shakti framework,the USD in early February 2026, recent geopolitical tensions have since outweighed expandedby7.0% in F2026,hitting 615%ofGDPthehighest share since FY12 those gains, pushing the currency back towards the 92-level as of March 2026. (adjusted to 55.7%] following the February 2026 GDP rebasing to the 2022-23 base Another defining trend in 2025 was the easing of inflation. Consumer Price Index (CPI) inflation fellto a historic low of 0.25% in October 2025, averaging ~2.1% in FY2026*. This environment provided the Reserve Bank of India the necessary headroom to implement cumulative repo rate cuts of 125 basis points, reducing the demand, underpinned by a favourable monsoon and a 3.6% agricultural GVA rate to 5.25% by December—a level maintained through February 2026. Fiscal growth. High-frequency indicators reinforced this trend: UPI transactions reached consolidation also remained on track; the fiscal deficit is estimated at 4.4% of GDP INR 230 lakh crore during April-December 2025, while two-wheeler sales in CY2025 for FY20265, while the current account deficit narrowed to 0.8% in the first halfof touched 2.03 crore1l0, reflecting broad-based consumption momentum spanning both Source: Budget 2026-27, CBRE Research, Q1 2026 prices in FY2026,FAE, MoSPl, January 2026,4.RIMPC,February2026,5. nion Budget 2026-27,February2026,6. Economic Survey, January 2026, Note: Indias CAD widened to 13% of GDP (USD 132bn) in the October-Decemberquarter of FY2026;7 Union Budget 2025-26,February2025,8. The Feb/Mar CPI(3.4%) are derived estimates calculated to align with the Q4 CPl projection of 3.2%.