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 Jan–Mar'26 (Q4 FY26), 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 global uncertainty. Services led at 10.0% YoY, driven by trade and financial, real estate and professional services, while industry expanded 7.3% YoY on manufacturing and construction, and agriculture remained subdued at 3.6% YoY. Gross capital formation posted its strongest growth in recent years, and private consumption rose 7.1% YoY, while government consumption dipped cyclically amid expenditure cuts to meet FY26 fiscal deficit targets.

High Frequency Indicators:

• High-frequency indicators reflected sustained domestic momentum in Apr–May'26, amid persistent external headwinds. IIP declined in Apr'26 as mining and manufacturing growth slowed. Cement production saw a cyclical downturn, even as steel consumption rebounded and daily average power consumption rose further in May'26 on heat-wave-driven cooling demand. JNPA container traffic slowed and air passenger bookings softened on weak travel demand and higher airfares, though air freight remained resilient. Auto sales stayed firm in May'26, primarily led by EV registrations.
  
• In the external sector, the merchandise trade deficit moderated to $28.2 Bn in May'26, while the services trade surplus narrowed to $17.7 Bn. Forex reserves inched down in May'26, driven by a decline in foreign currency assets and gold. FDI inflows surged to more than a five-year high in Apr'26, supported by stronger equity inflows and lower repatriations.
  
• BFSI indicators showed mixed trends in Apr–May'26. Aggregate credit inched down in Apr'26 as banks raised lending rates despite a steady repo rate. UPI transactions reached a record high in May'26 on seasonal consumer spending. Mutual fund AUM moderated slightly amid global market uncertainty and insurance premiums softened on a sharp drop in the non-life segment. Market activity was steady: NSE transactions were broadly flat while BSE transactions rose, and India VIX declined as sentiment improved on geopolitical de-escalation.
  
• On the macro front, the fiscal deficit widened to ₹3.6 Tn in Apr'26 on a sharp decline in revenue receipts amid post fiscal year-end normalization. GST collections moderated cyclically to ₹1.94 Tn in May'26. Inflation firmed further, with WPI surging to 9.7% on higher crude, natural gas and manufactured-product prices, and CPI reaching a 16-month high of 3.9%, led by transport, personal care and food. Both manufacturing and services PMI inched up in May'26 on stronger domestic demand and new business. Analysts project FY27 GDP growth of 6.0–7.1%, with the RBI pegging growth at 6.6%.