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 showed mixed trends in Aug–Sep’25 amid GST rationalization and U.S. tariff headwinds. IIP declined in Aug’25, reflecting a slowdown in manufacturing and the electricity sector. Steel consumption also softened, mainly due to subdued demand for non-alloy steel. Power consumption was broadly unchanged in Sep’25 vs Aug’25 amid prolonged monsoons and softer industrial activity. The auto sector hit new records across most segments in Sep’25 following GST changes: passenger vehicle (PV), two-wheeler (2W), and tractor sales recorded a sharp upward trend, while three-wheeler registrations saw a slight decline.
• On the trade front, the merchandise trade deficit widened to a 13-month high of $32.15 billion in Sep’25, fueled by substantial growth in gold and silver imports. The services trade surplus edged down to $15.53 billion in Sep’25, as exports fell slightly more than imports. Meanwhile, foreign-exchange reserves rose in Sep’25, primarily on higher gold holdings. FDI inflows fell sharply in Aug’25 as equity inflows declined and foreign disinvestment and repatriations increased.
• BFSI indicators showed contrasting trends in Sep’25. UPI transactions were broadly stable, with a slight dip in volumes. Insurance premiums increased; life premiums surged led by group single policies, while non-life premiums also rose sharply. Mutual fund AUM hit a new peak, supported by steady SIPs and retail inflows. In contrast, BSE trading activity weakened slightly, while NSE volumes saw a sharp rebound. Meanwhile, the VIX closed Sep’25 at a record low amid a lack of immediate market-moving triggers.

• On the macroeconomic front, WPI inflation inched down to 0.1% in Sep’25, driven by a decline in primary-article prices, while CPI inflation eased to an over 8-year low of 1.5% on softer food and beverage prices. Business activity moderated, with both manufacturing and services PMIs softening in Sep’25 as new orders and output eased amid weaker external demand. Sentiment improved, with consumer confidence rising across urban and rural areas on lower inflation expectations. On the fiscal side, India’s deficit narrowed in Aug’25, amid lower revenue expenditure and higher tax receipts. GST collections rose in Sep’25, aided by higher gross import revenues and stronger sales following recent tax-rate rationalization. Analysts project FY26 GDP growth at 6.5–6.9%.