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

June 2025

GDP & National Income Aggregates:

• In Jan-Mar'25 India's real GDP expanded 7.4% YoY, outperforming expectations despite global trade headwinds.
• Among the sectoral gross value-added, growth was driven primarily by robust industrial activity with the sector growing at 6.5% YoY. Services continued to remain the principal contributor at 7.3% YoY. Agriculture accelerated to 5.4% YoY, a sharp uptick from the same quarter of FY24.
• Private consumption moderated from Oct-Dec'24 as restrained urban spending offset a rural upturn. Government consumption climbed seasonally to its fiscal-year peak, yet contracted on an annual basis for the quarter. Gross capital formation surged on the Mar'25 capex push to meet revised targets, and buoyant net indirect tax collections further underpinned the quarter growth.

Key highlights include:

• Among high-frequency indicators, IIP declined by 8% in Apr'25 after surging in Mar'25, driven by pronounced slowdowns in mining activity and capital goods segment. Cement production declined amid a cyclical slowdown in construction activity post fiscal year-end closure in Apr'25. On the other hand, steel consumption increased in May'25, driven by the non-alloy sector. Power consumption declined marginally in May'25 due to unseasonal rainfall and slowing industrial activity. The auto sector recorded positive trends across most categories in May'25, fueled by increased demand in utility vehicles, scooters, and tractors amid positive agricultural sentiments.
• In the trade segment, merchandise trade deficit narrowed sharply to $21.9 Bn in May'25, driven by a decline in crude oil and petroleum imports amid falling global oil prices. Exports witnessed a seasonal uptick, driven strongly by the electronic goods category including mobile phones. On the services trade front, surplus shrunk to $15.3 Bn, driven by a fall in exports vs. Apr'25. Forex reserves strengthened in May'25 following an accumulation of foreign-currency assets. FDI surged in Apr'25 buoyed by strong equity inflows and a fall in repatriations.
• BFSI indicators exhibited mixed trends in Apr-May'25. While aggregate credit remained largely stable, aggregate deposit inched up marginally in Apr'25. UPI transactions reached record highs in May'25 after dipping slightly in Apr'25. Although overall insurance premiums dipped in May'25, life insurance premiums surged driven by the group single premium category. Further, both NSE and BSE transactions increased in May'25 due to renewed foreign investor buying and positive sentiments towards the second half of the month. Market volatility index (VIX) closed lower in May'25 signaling an optimistic outlook over Jun'25.
• On the macroeconomic side, WPI inflation continued to fall to a 14-month low in May'25 at 0.4%, driven by a decline in primary articles and manufactured products prices. CPI inflation eased to its lowest level since Jul'19 in May'25 at 2.82%, led by significant easing in food prices. Manufacturing PMI dipped slightly to 57.6 amid cost pressures, increased competition, and geopolitical conflicts. In contrast, services PMI inched up marginally to 58.8 buoyed by strong export orders. GST collections recorded a cyclical decline in May'25 after reaching an all-time high in Apr'25. MGNREGA employment surged in May'25 as agricultural activities dwindled due to the lean cropping season. RBI reduced the repo rate by 50 bps to 5.5% in Jun'25 to spur economic growth amid an uncertain global economic climate. Analysts forecast FY26 GDP to grow between 6.2-6.7%.