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

August 2025

Key highlights include:

• High-frequency indicators exhibited mixed trends in Jun-Jul'25 amid global headwinds and trade uncertainties. IIP declined in Jun'25, reflecting weaker mining activity and lower primary goods output. Steel consumption also softened, mainly due to subdued demand for alloy steel. Power consumption remained broadly unchanged in Jul'25 from Jun'25, tempered by higher-than-usual monsoons. The auto sector witnessed contrasting trends across segments in Jul'25. While passenger vehicle (PV) sales rebounded and 2W sales largely remained unchanged, tractor sales recorded a sharp seasonal downturn. In the energy domain, renewable energy generation surged to a new record in Jun'25, driven primarily by wind and small hydro sources.
• On the trade front, merchandise trade deficit widened to an 8-month high of $27.4 bn in Jul'25, reflecting stronger imports of petroleum products and gold amid ongoing global tariff uncertainties. In contrast, the services trade surplus remained broadly stable at $15.6 bn, although imports contracted at a slightly faster pace than exports. Meanwhile, forex reserves edged lower in Jul'25, primarily due to a decline in foreign currency assets. FDI inflows rebounded in Jun'25 amid a surge in equity investments.
• BFSI indicators reflected contrasting signals in Jun–Jul'25. Both aggregate credit and deposits continued to inch upwards in Jun'25. UPI transactions rebounded sharply, with volumes touching a record high in Jul'25. Insurance premiums also grew during the month, led by robust growth in the non-life segment. Similarly, mutual fund AUM rose to a new peak, supported by strong inflows into both debt and equity schemes. In contrast, trading activity on the NSE and BSE weakened in Jul'25. The market volatility index (VIX) also slipped further to close at a 22-month low, amid the absence of pronounced market swings.
• On the macroeconomic front, WPI inflation fell to a 25-month low (−0.6%); CPI inflation eased to a 6-year low of 1.6% in Jul’25, led by softer food & beverage prices. Meanwhile, business activity indicators remained robust. Manufacturing PMI climbed to a 16-month high of 59.1, supported by stronger new orders, output, and inventories. Services PMI also rose to an 11-month high of 60.5, indicating sustained momentum across both sectors. Fiscal and revenue trends were more mixed in this period. GST collections increased in Jul'25, supported by higher gross import revenues. However, India’s fiscal deficit widened sharply in Jun'25, reflecting weaker non-tax revenues and a surge in interest payments. Analysts project FY26 GDP growth at 6.2-7.0%.