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:

GDP & National Income Aggregates:

• In Apr–Jun'26 (Q1 FY27), India's real GDP grew 7.8% YoY under the revised 2022–23 base-year series, supported by strong investment and services-sector momentum amid geopolitical uncertainty.
• Among the sectors, services led the growth at 10% YoY, driven by financial services, real estate and professional services, while industry expanded 7.7% YoY on manufacturing, and agriculture slowed to 3.6% YoY.
• Gross capital formation grew 10.1% YoY, its strongest pace in recent years, while private and government consumption rose 7.1% and 4.3%, respectively; all three moderated sequentially.

High Frequency Indicators:

• High-frequency indicators showed sustained domestic momentum in Jul–Aug’26, though most moderated sequentially. IIP eased in Jul’26 as mining contracted, while cement fell to an 8-month low amid monsoon disruption. Steel consumption and average daily power use edged down. Electricity and renewable generation rose in Jul’26, while natural gas plunged as LNG imports fell and diesel consumption hit an 11-month low. Auto was mixed: PV sales and 3W registrations fell; tractors hit a 12-month low on monsoon deficit, while 2W rose to a 10-month high. In logistics, JNPA traffic surged and air freight hit an all-time high in Jul’26, while air passenger traffic fell to a 34-month low.
• The merchandise trade deficit narrowed to a 5-month low of $26.9 Bn in Aug’26, on lower gold and non-petroleum imports. The services surplus edged down to $17.5 Bn as imports outpaced exports, while forex reserves hit a record $741 Bn, driven by higher foreign currency assets and gold. FDI rose sharply, led by higher equity inflows and lower repatriation/disinvestment, surpassing CY25 estimates. In Q1 FY27, the USA remained the largest export destination, as Singapore and China gained share; China remained the largest import source.
• BFSI indicators were mixed in Jul–Aug’26. UPI volumes hit a record high in Aug’26 on wider adoption, though transaction value eased slightly, while mutual fund AUM reached a new peak. Aggregate deposits and credit rose marginally in Jul’26, whereas insurance premiums declined across segments. Markets softened, with NSE transactions down to a 5-month low and BSE activity also lower mainly on fewer trading sessions. India VIX fell to an 8-month low as geopolitical and oil-supply concerns eased slightly.
• On the macro side, fiscal deficit remained the same while GST collections moderated in Aug'26. WPI rose to 9.9% on fuel & power and manufactured products, while CPI hit a 20-month high of 4.8%, above the RBI's target but within tolerance band. Employment climbed to an 8-month high in Aug'26, led by construction and agriculture, while VB-G RAM G employment stayed relatively subdued. Services PMI rebounded to 54.1, even as manufacturing PMI slipped to a 5-year low of 52.8. FY27 GDP forecasts in the Aug–Sep'26 range from 6.7% to 7.3%.