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 pointed to mixed domestic momentum in Aug–Sep’26, as pre-festive demand lifted autos and logistics while industrial activity softened. IIP declined further in Aug’26, and cement production slowed seasonally, while steel and daily average power consumption moderated in Sep’26. Renewable generation edged up in Aug’26 while natural gas consumption fell sharply on lower LNG imports, and diesel consumption recovered partially in Sep’26. Auto sales rebounded broadly in Sep’26, with 2W sales climbing to a two-year high. In logistics, e-way bills and JNPA traffic hit record highs in Sep’26 amid pre-festive goods movement, while air passenger traffic edged up.
• Merchandise trade deficit widened to US$30.2 billion in Sep’26, driven by a surge in crude oil prices despite lower gold imports. The services trade surplus also widened marginally to US$16.9 billion, as exports and imports were broadly stable. Forex reserves rose marginally to US$748 billion by end Sep’26 after reaching a record high in early September driven by inflows under RBI’s deposit schemes. FDI inflows moderated in Aug’26 as gross inflows eased, though net FDI remained positive for the third consecutive month.
• BFSI indicators were mixed in Aug–Sep’26, with lower UPI transaction volumes and decline in mutual fund AUM, driven by equity market correction. Insurance premiums rebounded, driven by both life and non-life categories. Aggregate deposits rose sharply due to a surge in NRI foreign currency deposits, while credit grew modestly. NSE transactions fell to a 6-month low amid weak sentiment and sustained FPI outflows, while BSE transactions climbed to a 2-year high, boosted by heavy trading in NSE shares following their listing. India VIX rose to 13.5 amid renewed West Asia tensions, rising crude prices and broader market weakness.
• On the macroeconomic front, fiscal deficit widened sharply in Aug’26 as net tax receipts declined significantly following an additional tax devolution to states, despite lower expenditure. GST collections edged up marginally in Sep’26 due to higher collection from imports, while the rupee held broadly stable at ₹95.5 per US dollar supported by RBI intervention. Inflation remained elevated, with WPI at a series high of 11.4% and CPI rising to 5.5% on a sharp increase in food prices. Manufacturing PMI rebounded to a 7-month high and services PMI rose, while consumer confidence weakened further. FY27 GDP forecasts were revised upwards to 7.0–7.3%.