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

June 2025

GDP & National Income Aggregates:

• In Jan-Mar'25 India's real GDP expanded 7.4% YoY, outperforming expectations despite global trade headwinds.
• Among the sectoral gross value-added, growth was driven primarily by robust industrial activity with the sector growing at 6.5% YoY. Services continued to remain the principal contributor at 7.3% YoY. Agriculture accelerated to 5.4% YoY, a sharp uptick from the same quarter of FY24.
• Private consumption moderated from Oct-Dec'24 as restrained urban spending offset a rural upturn. Government consumption climbed seasonally to its fiscal-year peak, yet contracted on an annual basis for the quarter. Gross capital formation surged on the Mar'25 capex push to meet revised targets, and buoyant net indirect tax collections further underpinned the quarter growth.

Key highlights include:

• In May–Jun'25, high-frequency indicators exhibited mixed trends amid geopolitical conflicts and trade uncertainties. The Index of Industrial Production (IIP) rebounded in May'25, led by the manufacturing and mining sector indices, along with increased capital goods production. Steel consumption inched up slightly as flat-steel demand rose amid moderating prices. Cement production increased despite rising prices in May'25. Power consumption rose to a cyclical high in Jun'25, driven by increased seasonal demand and industrial activity. The auto sector witnessed divergent trends across most categories in Jun'25. Passenger vehicle (PV) sales declined due to weak buyer sentiment in urban markets. Tractor sales were boosted by revived rural sentiment and early monsoon rains. In the energy sector, renewable energy generation increased significantly, primarily due to wind power.
• In the trade segment, the merchandise trade deficit narrowed further to $18.8 Bn in Jun'25, led by declines in imports of electronic goods, crude oil, and bullion. The services trade surplus held nearly steady at $15.3 Bn in Jun'25, although imports grew at a slightly faster rate than exports. Forex reserves grew in Jun'25, driven by a $10.6 Bn rise in foreign-currency assets. On the other hand, FDI plummeted to its lowest level of the year in May'25, due to declining gross inflows and a surge in repatriation.
• BFSI indicators also exhibited mixed trends in May–Jun'25. Aggregate credit and deposits edged up in May'25. UPI transactions witnessed a seasonal dip in Jun'25, in the absence of major events or festivals, after reaching record highs in May'25. Insurance premiums climbed sharply in Jun'25, powered largely by a surge in the group single‑premium life category. Mutual fund AUMs reached a record high, boosted by increasing retail participation and rising SIP inflows in Jun'25. Furthermore, both NSE and BSE transactions increased in Jun'25, reaching a 9-month high. The market volatility index (VIX) continued its downward trend in Jun'25, indicating a positive outlook for future market conditions.
• On the macroeconomic front, WPI inflation continued to fall, reaching a 15-month low of -0.1% in Jun'25, driven by a decline in food and fuel prices. CPI inflation eased to a 6-year low of 2.1% in Jun'25, led by deflation in food and beverage prices. Manufacturing PMI grew to 58.4, supported by increased export orders across all categories. Similarly, Services PMI rose to 60.4, buoyed by a surge in new business orders. GST collections dropped to a 4-month low in Jun'25, due to a decline in IGST collections and lower import revenue. India also recorded a fiscal surplus in May'25, driven by a higher-than-budgeted RBI dividend, amid a cyclical drop in capital expenditure. To cushion growth amid a shaky global backdrop, the RBI cut the repo rate by 50 basis points, bringing it down to 5.5% in Jun'25. Analysts forecast GDP growth between 6.2–6.7% for FY26.