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

Key highlights include:

• High-frequency indicators indicated sustained domestic momentum in May–Jun'26. Industrial activity remained firm, with IIP rising in May, although steel consumption eased marginally. Electricity generation increased sharply, supported by strong growth in the renewable segment. The auto sector saw a cyclical moderation, as passenger vehicle and two-wheeler sales softened. In contrast, three-wheeler registrations increased, aided by strong electric vehicle registrations, while tractor sales benefited from kharif sowing activity and improved affordability following GST cuts. On the logistics front, air freight volumes edged up to a record high in May'26, while container traffic at JNPA softened.
• India’s merchandise trade deficit widened to US$30.4 billion in Jun'26, partly reflecting a sharper decline in petroleum product exports than in imports. The services trade surplus also narrowed to US$15.1 billion amid lower exports and higher imports. Foreign exchange reserves fell further, driven by significant declines in gold holdings and foreign currency assets. Meanwhile, FDI inflows slipped to a 4-month low in May'26, as gross equity inflows normalized following an unusually strong surge in April.
• BFSI indicators remained broadly stable in Jun'26. UPI transaction volumes moderated seasonally after reaching a record high in May, while mutual fund assets under management edged up as SIP inflows rose to an all-time high. Insurance premiums increased, led primarily by growth in the health segment. Capital market activity strengthened, with NSE and BSE transactions rising partly due to a higher number of trading days. Meanwhile, the VIX closed the month lower in Jun'26 as investor sentiment improved following the temporary de-escalation of the US–Iran conflict.
• On the macroeconomic front, India recorded a fiscal surplus in May'26, supported by a sharp rise in government revenue following the RBI’s record surplus transfer, which boosted non-tax receipts. GST collections edged up in June, driven by stronger import-related tax revenues. The rupee also recovered marginally against the US dollar to 95.0, while the real effective exchange rate strengthened. Inflationary pressures continued to build, with WPI inflation reaching 9.9% and CPI inflation rising to an 18-month high of 4.4%, above the RBI’s 4% target. Rural employment weakened amid delayed monsoon rains, while urban employment rebounded. Business sentiment softened as both manufacturing and services PMIs eased. Analysts expect India’s GDP growth to range between 6.0% and 7.0% in FY27.