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

January 2025

Key highlights include:

• In Dec'24, the economy exhibited a mixed performance vs. the previous month. While industry and trade slowed down, BFSI indicators demonstrated notable improvement. IIP dipped slightly in Nov'24 from its Oct'24 level, driven by a slowdown in manufacturing output and electricity generation, while mining showed a moderate increase. Cement production declined, but steel consumption surged vs. the previous month. Auto sales slumped in Dec'24 due to pricing pressures and a preference for new calendar-year models, though 2024 saw record-breaking sales with positive YTD growth.
• On the trade front, the merchandise trade deficit narrowed to a three-month low in Dec'24, primarily due to a sharp drop in gold imports, while electronic exports hit a 24-month high. A decline in services exports led to a fall in trade surplus of services. Forex reserves continued to fall as foreign currency assets declined amid RBI's efforts to curb rupee depreciation. FDI plummeted sharply in Nov'24 due to global economic shifts and a rise in the repatriation of equity capital.
• BFSI indicators showed signs of improvement. UPI transactions resumed their upward trajectory after a dip in Nov'24, reaching an all-time high in volume in Dec'24, fueled primarily by growth in person-to-merchant transactions. Both life and non-life insurance premiums recorded an increase in Dec'24. Transactions on NSE and BSE rebounded, showing with an uptick in Dec'24 vs. Nov'24 levels.
• In terms of macroeconomic indicators, WPI inflation rose to 2.4% in Dec'24, driven by a spike in the prices of primary articles and manufactured products. CPI inflation eased to a four-month low of 5.2%, attributed to a slower rise in food prices and continued decline in fuel prices. The manufacturing PMI fell to a 12-month low at 56.4, reflecting slower growth in orders amid competition and price pressures. In contrast, services PMI rose to 59.3, supported by strong demand, new business inflows, and workforce expansion. GST collections declined in Dec'24 due to a post-festive slump and higher refunds. Analysts revised FY25 GDP growth forecasts downward to 6.3-6.8% YoY, reflecting economic uncertainties in Dec'24-Jan'25.

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