Week in Numbers: Tracking India’s Economic Pulse

India’s current account deficit widened to $12.31 billion in July-September from $2.74 billion a quarter ago, but was sharply lower than $20.86 billion a year ago. As a percentage of GDP, the current account deficit rose to 1.3% from 0.3% a quarter ago, but was down from 2.2% a year ago. The rise in the current account deficit was driven by a sharp increase in the merchandise trade deficit, partly reflecting weaker exports amid US tariff increases. Merchandise trade deficit widened to $88.44 billion in July-September from $68.89 billion a quarter ago. But a rise in invisibles to $75.13 billion from $66.15 billion a quarter ago limited the increase in the current account deficit.

Although the current account deficit in July-September is sharply lower than a year ago, it was accompanied by a steep decline in the capital account surplus. The balance of payments turned negative in July-September at $10.92 billion, compared with a surplus of $4.51 billion in April-June and $18.61 billion a year ago, as the outflow of foreign portfolio investments moderated the capital account surplus. Net capital inflows slumped to $575 million in July-September, from $7.99 billion in the first quarter and $39.92 billion a year earlier.

 

India’s industrial growth fell to a 14-month low of 0.4% in October from 4.6% a month earlier, pulled down by contraction in the electricity and mining sectors. Electricity generation declined 6.9% in October, the steepest fall since the COVID-19 pandemic. Mining output fell 1.8%, pulled down by lower coal, crude and natural gas production during the month. A higher number of festival holidays also contributed to the slowdown.

Growth in manufacturing, which accounts for more than three-fourths of the Index of Industrial Production, moderated to 1.8% from 5.6% in September. The weakness within manufacturing was broad-based, with 14 of 23 industry groups recording year-on-year contraction during the month.

Within use-based classifications, output of consumer durable goods and consumer non-durable goods declined by 0.5% and 4.4%, respectively, suggesting weakness in consumer demand as festive demand faded.

 

Purchasing Managers’ Indices showed divergent trends in November, with manufacturing activity moderating and services activity improving. HSBC India’s manufacturing PMI fell to a nine-month low of 56.6 in November, down from 59.2 in October, as exports and domestic sales slowed amid increased US tariffs and fading effects of recent reduction in goods and services tax rates. Despite the moderation, the index remained well above the neutral 50.0 threshold and the long-run average of 54.2.

Expansion in new orders and output was the weakest since February, reflecting the slowest increase in export orders in more than a year. Softer sales momentum also curbed input purchasing and limited job creation.

The data show business confidence weakened to a three-and-a-half-year low, with firms citing heightened competitive pressures, including from overseas producers. Survey responses indicated the boost from GST rate cuts may be fading and insufficient to counter the demand drag from US tariffs.

Services PMI rose to 59.8 in November from 58.9 in October, boosted by a faster increase in new business orders. However, growth in services exports fell to an eight-month low. The Composite PMI fell to a six-month low of 59.7 in November from 60.4 in October.

 

India’s GST collections declined year-on-year for the first time in over five years in November, as the impact of tax rate changes began to reflect in the collections. Total collections in November declined 4.0% to ₹1.75 trillion, while cess collections fell 64.1% to ₹47.56 billion. Sequentially, gross collections declined 10.7%.

Net GST collections declined 4.2% to ₹1.56 trillion in November. Total GST collections in April-November rose 7.4% to ₹15.64 trillion, while net collections rose 5.6% to ₹13.63 trillion.

 

The Reserve Bank of India, which cut the policy repo rate by 25 basis points to 5.25%, revised its growth and inflation forecasts. In its December monetary policy, the central bank slashed its CPI inflation forecast for 2025-2026 to 2.0%, down from 2.6% in October. This means, the RBI has reduced its inflation forecast for 2025-2026 at each of the last five monetary policy reviews. The central bank had initially projected the average inflation for the year at 4.2% in February 2025. The RBI has projected inflation at 3.9% for April-June next year and 4.0% for July-September.

The central bank raised its GDP growth forecast for 2025-2026 to 7.3% from 6.8% earlier, reflecting a stronger-than-expected growth in the first two quarters of the year. India’s GDP grew 8.2% in the July-September quarter compared with the RBI’s projection of 7.0%. In the first quarter, the GDP grew 7.8%, compared with the RBI’s projection of 6.5%. The RBI projects the GDP to grow 6.7-6.8% in the first two quarters of 2026-2027.

 

India’s power generation from conventional sources declined 5.1% year-on-year to 111.76 billion kWh in November. This is the sixth time in the last eight months that power generation from traditional sources has contracted. In absolute terms, generation in November was the lowest in 33 months.

The decline was led by thermal power generation, which accounts for over 80% of India’s conventional energy capacity. Thermal power generation declined 6.2% to 97.75 billion kWh in November. Over the last few years, power generation from traditional sources, especially thermal plants, has been losing share of the total generation mix. The share of thermal power in overall energy generation, including renewables, fell to 69.1% in October from 78.7% two years earlier.

Freight traffic handled by major ports rose 7.6% year-on-year to 591.38 million tonnes in April-November, driven by robust growth in crude, petroleum products and container traffic. Crude and petroleum product volumes increased 10.0% to 178.99 million tonnes, while container traffic rose 10.7% to 138.82 million tonnes. Iron ore volumes continued to be a drag, falling 2.3% to 31.66 million tonnes.

 

Capacity utilisation in the manufacturing sector declined in July-September, though it remained well above the long-term average. According to Reserve Bank of India Governor Sanjay Malhotra, early results indicated that seasonally adjusted capacity utilisation in the manufacturing sector fell to 74.8% in the second quarter, a three-quarter low. Studies suggest that utilisation rates of 72.4% to 74.4% usually trigger private corporate investment. Although the seasonally adjusted capacity utilisation has been above that mark for 14 quarters, India has yet to witness any sharp increase in private capital expenditure. 

Consumer confidence in urban areas has improved significantly, driven by more positive sentiment, particularly regarding prices and the general economic situation. According to the Reserve Bank of India’s bi-monthly Urban Consumer Confidence Survey, the Future Expectations Index remained highly optimistic at 125.6 in November, rising 0.6 points from September. This is the highest level in nearly six and a half years. The Current Situation Index improved to a one and a half year high of 98.4 in November.

 

Gross direct premiums of general insurance companies, including stand-alone health insurers, rose 24.2% year-on-year to ₹268.97 billion in November. For April-November, premiums increased 8.0% to ₹2.05 trillion. The growth rates are not strictly comparable because the Insurance Regulatory and Development Authority of India excluded long-term policy premiums from calculations, effective October 1, 2024.

 

 

Hotel occupancy rates in India stood at 58-60% in October, up 0-2 percentage points from a year ago, but 2-4 percentage points lower than a month ago, according to HVS Anarock. Average room rates rose 10-12% year-on-year to ₹8,800-9,000 in October. Revenue per available room rose to ₹5,104-5,400, up 12-14% from a year ago and 5-7% from a month ago.

India’s foreign exchange reserves fell $1.88 billion week-on-week to $686.23 billion as of November 28, primarily because of the RBI’s continued intervention in the market to curb sharp depreciation in the rupee. Foreign currency assets fell $3.57 billion to $557.03 billion, while gold reserves rose $1.61 billion to $105.80 billion. Despite the RBI’s heavy intervention, India’s foreign exchange reserves have increased by $17.90 billion so far in 2025-26, primarily due to a sharp rise in gold prices.

 

Reserve money growth moderated to 1.6% year-on-year as of November 28 from 1.8% a week earlier. Currency in circulation rose 9.0% year-on-year to ₹38.66 trillion as of November 28.

 

Rabi acreage was robust, supported by ample soil moisture and healthy reservoir levels. As of November 28, the area under Rabi crops stood at 39.31 million hectares, up 9.9% year-on-year. The area under wheat, the main Rabi crop, rose 16.9% to 18.74 million hectares. Pulses acreage rose 2.3% to 8.70 million hectares, and oilseeds increased 4.1% to 8.05 million hectares.

 

 

Post-monsoon rainfall remained well above normal, mainly due to heavy rains in October. As of December 5, the cumulative rainfall stood at 132.3 mm, 23% above the normal of 107.4 mm. The rainfall during the season so far was more than 20% above normal in 62% of the country’s area.

Reservoir storage recorded the highest week-on-week fall in 30 weeks as rains abated and the Rabi sowing accelerated. As of December 4, 166 reservoirs in the country held 158.6 billion cubic metres, down 2.6 billion cubic metres from a week ago. The storage level was 86% of live capacity, 7% higher than a year ago and 22% above the 10-year average.

 

Coming up:

• Dec 12 – Consumer Price Index for November
• Dec 15 – Trade data for November
• Dec 15 – Periodic Labour Force Survey for November 
• Dec 16 – HSBC India Flash PMI for December 

Tailpiece
A quick survey by the Reserve Bank of India showed that professional forecasters raised their projections for India’s GDP growth in 2025-2026 by 50 basis points to 7.5% after the release of the July-September GDP data, compared with 7.0% in the regular survey conducted in November.