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

February 2025

Key highlights include:

• In Dec'24–Jan'25, key economic indicators exhibited mixed trends compared to the previous month. The industrial sector witnessed an uptick with IIP surging in Dec'24, driven primarily by the electricity sector, followed by manufacturing and mining. Key underlying metrics including cement production, steel output, and power consumption inched up. The auto sector started 2025 on a steady note with the passenger vehicles category recording their highest ever January sales. Sales improved across most categories vs. previous month fueled by spillover demand and new model launches.
• On the trade front, the merchandise trade deficit widened to $23 Billion in Jan'25 as exports declined, driven by a significant fall in petroleum products exports. In contrast, services trade surplus hit a record high, fueled by a sharp rise in services exports. Forex reserves continued to decline, largely due to RBI’s interventions to stabilize the rupee. Although FDI surged in Dec'24 after a sharp drop in Nov'24, it registered an overall decline for 2024 compared to the previous year.
• BFSI indicators also showed contrasting trends in Jan'25 vs. previous month. UPI transactions saw an uptick, with volumes reaching a record high of 17 billion. Mutual fund AUM declined slightly after hitting an all-time high in Dec'24 due to market volatility. While NSE transactions broadly remained at a similar level, BSE transactions declined vs. previous month. Insurance premiums inched upwards, primarily driven by an increase in health insurance premiums in the non-life segment.
• Macroeconomic indicators showed mixed trends in Jan'25. While WPI inflation softened slightly to 2.3%, CPI inflation dipped to a five-month low of 4.3%, as food price inflation eased alongside a decline in energy costs. Manufacturing PMI surged, fueled by strong output growth and a 14-year high in export orders, while Services PMI dropped due to weaker new business growth. GST collections surged sharply, driven by a significant jump in revenue from import from previous year. Meanwhile, Future Expectations Index (FEI) and Current Situation Index (CSI) weakened, reflecting subdued sentiment across most survey parameters, except for price levels. FY25 GDP growth forecasts remain between 6-7%.