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

March 2025

Key highlights include:

GDP & National Income Aggregates:

• In Oct-Dec'24, India's real GDP rebounded to 6.2% YoY after hitting a 7-quarter low in the previous quarter. This recovery was driven by private consumption and government spending.
• Among sectoral gross value added, services sector led growth at 7.4% YoY, while industrial output rebounded to 4.5% YoY, supported by the construction sector, despite a slowdown in mining. Agriculture improved steadily to 5.6% YoY, benefiting from favorable monsoons.
• Private consumption rose 6.9% YoY, fueled by rural demand and festive spending. Although government expenditure declined from previous quarter, it recorded a strong 8.3% YoY growth. Gross capital formation declined from previous quarter, with YoY growth rate also slowing significantly to 5% compared to the same quarter of FY24.

High Frequency Indicators:

• In Feb'25, high-frequency indicators exhibited mixed trends vs. the previous month, reflecting both sector-specific factors and the effect of February’s shorter duration. IIP reached an all-time high in Jan'25, driven by the mining and electricity sector indices. While cement production and daily average power consumption grew, steel consumption declined vs. previous month. The auto sector saw declines across most categories in Feb'25, reflecting seasonal trends amid subdued market sentiment.
• In the trade segment, merchandise trade deficit narrowed sharply to a 3.5-year low of $14 Bn in Feb'25, driven by a significant fall in gold and crude oil imports. Services trade surplus registered a decline, driven by a fall in exports. Forex reserves increased owing to a rise in foreign currency assets and gold reserves. FDI started the year on a positive note in Jan'25, continuing its upward trajectory from Dec'24.
• BFSI indicators showed mixed trends in Feb'25. While aggregate deposits & credits reached record highs, UPI transactions eased slightly to ₹ 22 Tn in Feb'25 after reaching their all-time high in Jan'25. Life insurance premiums declined vs. Jan'25, while health insurance premiums witnessed some growth. However, overall non-life insurance premiums registered a MoM decline. Meanwhile, transactions on both NSE and BSE declined sharply, reaching a 15-month low amid heightened market volatility, foreign investor outflows, and global economic concerns.
• On the macroeconomic front, overall WPI inflation edged up slightly to 2.4% in Feb'25, driven by higher prices of manufactured goods. CPI inflation eased to a 7-month low of 3.6%, primarily attributed to a slowdown in food and beverage inflation. Manufacturing PMI dipped to 56.3 amid a slight loss of momentum in new orders and production. In contrast, Services PMI rose to 59, supported by strong demand and productivity gains. GST collections recorded a MoM decline, primarily due to a sharper drop in revenue from imports. The RBI cut the repo rate by 25 bps to stimulate economic growth, marking its first reduction in nearly 5 years. Analysts forecast FY26 GDP to grow between 6.3-7.0%.