India Economic Monitor

BCG’s India Economic Monitor shares insights on the state of Indian Economy from the most recent month, capturing 30+ key macroeconomic indicators and comparing them with trends observed in recent months. These indicators include industrial activity, trade, financial services, economic sentiments and sector-wise trends.

Brief Summary for Latest Report

GDP & National Income Aggregates:

• India’s real GDP expanded by 7.8% YoY in Apr-Jun'25, marking a 5-quarter high and surpassing expectations despite global uncertainties.
• Growth was led by the services sector, which recorded a robust 9.3% YoY increase, followed by manufacturing at 6.3% YoY, although mining decelerated. Agriculture also registered healthy growth of 3.7% YoY, a sharp improvement over Apr-Jun'24.
• On the expenditure side of things, private consumption remained broadly stable compared to Jan-Mar'25, with rural spending outpacing urban for the sixth consecutive quarter. In contrast, government spending and gross capital formation dipped seasonally from the previous quarter, yet each continued to post strong annual gains.
  

High Frequency Indicators:

• High-frequency indicators signaled mixed momentum in Jul-Aug’25. IIP rebounded to 155 in Jul’25, supported by robust growth in manufacturing, even as mining registered a sharp slowdown. Cement production, however, declined to an 8-month low in Jul’25. Steel consumption rose in Aug’25, driven by strong demand in the non-alloy segment. Power consumption declined in Aug’25, reflecting the impact of prolonged monsoons. The auto sector displayed divergent trends: passenger vehicle sales fell amid anticipation of upcoming GST reductions, while two-wheeler sales surged, buoyed by rural demand and festive spending
• In Aug'25, India’s merchandise trade deficit narrowed slightly to $26.5 billion, supported by stronger exports of non-petroleum goods, jewellery, and electronics. However, forex reserves declined further, mainly due to a drop in foreign currency assets. On the investment side, FDI inflows accelerated in Jul'25, driven by larger equity inflows through the RBI route and higher share acquisitions. Notably, cumulative FDI in 2025 (up to Jul'25) has already surpassed the total inflows for all of 2024.
• BFSI indicators showed mixed trends in Jul-Aug’25. Aggregate deposits and credit remained broadly stable in Jul’25. UPI volumes hit a record 20 billion transactions in Aug’25, though values eased slightly, with most driven by financial payments and essential purchases. In contrast, life and non-life insurance premiums declined, reflecting weak crop insurance, a subdued vehicle market, and lower group single premiums. Equity market activity was uneven, with NSE transactions falling and BSE rising. Meanwhile, GST collections moderated in Aug’25, weighed down by softer seasonal demand.
• On the macroeconomic front, WPI inflation climbed to a 4-month high in Aug’25, driven by higher food, textiles, and electrical equipment prices. The fiscal deficit narrowed in Jul’25 as expenditure contracted more sharply than receipts. CPI inflation also edged up, led by costlier vegetables, meat, eggs, oils, and personal items. Services PMI rose to a 15-year high in Aug’25 on strong new orders and output, while Manufacturing PMI reached an 18-month high supported by rising factory demand. Meanwhile, MGNREGA demand and employment continued to decline due to kharif sowing, monsoon rains, and funding constraints, even as rural employment increased through other avenues. Analysts now project FY26 GDP growth in the 6.2–6.9% range.