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 domestic momentum in Jun–Jul’26, though sectoral performance was uneven. Industrial activity was broadly stable, with IIP holding steady and cement production rising in Jun’26, while steel consumption edged up and daily average power consumption eased marginally in Jul’26. Auto sales were mixed: passenger vehicle sales reached a record high in Jul’26 led by EVs and supported by lower GST rates, softer financing costs, and new model launches—while two- and three-wheeler volumes increased. Tractor sales declined sharply on cyclical factors. Logistics indicators diverged, with JNPA container traffic and e-way bill generation rising as air passenger traffic softened.
• Merchandise trade deficit widened to a 6-month high of US$31.9 billion in Jul’26, as surging imports of gold and electronic goods more than offset a sharp rise in petroleum exports. The services trade surplus also narrowed to US$16.9 billion, reflecting weaker exports and higher imports. Meanwhile, forex reserves rebounded, driven by a sharp increase in foreign currency assets. FDI inflows strengthened in Jun’26, supported by higher equity inflows and other capital, despite an increase in repatriation.
• BFSI indicators strengthened in Jul’26, with UPI transaction volumes and mutual fund AUM reaching record highs. BSE transactions rose to a multi-month high, aided by two additional trading days, while NSE transactions dipped only marginally. India VIX declined further, signaling improved investor sentiment. Aggregate credit and deposits also edged up in Jun’26, driven by higher loans, cash credits & overdrafts and time deposits.
• On the macroeconomic front, India recorded a fiscal deficit in Jun’26 after a surplus in May, as non-tax revenues normalized and capital and interest spending increased. GST collections rose to a three-month high in Jul’26, while the rupee weakened to ₹95.8 per US dollar amid higher oil prices, US tariff uncertainty and sustained FPI outflows. Inflation remained elevated, with WPI at 9.8% and CPI rising to a 19-month high of 4.5%, above the RBI’s 4% target for the second straight month. Employment fell to a 4-month low, while Manufacturing and Services PMIs and consumer confidence weakened. Analysts expect FY27 GDP growth of 6.0–7.0%.