Week in Numbers: Tracking India’s Economic Pulse

India’s private-sector manufacturing activity slowed in March as elevated crude prices and geopolitical uncertainty dampened demand. The HSBC India Manufacturing PMI fell to 53.9 from 56.9 in February, marking a near four-year low and falling below the series’ long-run average of 54.2.

Growth in manufacturing moderated amid rising cost pressures and uncertainty, leading to slower expansion in new orders and output. Output growth eased to its weakest pace since mid-2022, while input cost pressures intensified to the highest level since August 2022. Despite higher input costs, firms raised factory-gate prices only modestly, pointing to margin compression.

Goods and services tax collections, including the compensation cess, crossed the ₹2 trillion mark in March for the first time in 10 months. Gross collections rose 2.1% year-on-year to ₹2.00 trillion, while net collections, after refunds, increased 0.7% to ₹1.78 trillion.

For 2025-26, total GST collections stood at ₹23.32 trillion, up 5.6% from the previous year. The Centre’s share is projected at ₹10.46 trillion, reflecting a modest 1.9% growth.

Industrial growth inched up to 5.2% in February from an upwardly revised 5.1% in January, supported by stronger manufacturing activity. Manufacturing output, which accounts for over three-fourths of the Index of Industrial Production, grew 6.0%, driven by robust expansion in basic metals (13.2%), motor vehicles, trailers and semi-trailers (14.9%), and machinery and equipment (10.2%).

Among use-based industries, capital goods output rose sharply by 12.5%, while infrastructure goods growth moderated to 11.2%.  Consumer durables growth edged up to 7.3%, whereas consumer non-durables contracted by 0.6%.

Industrial activity has improved in the second half of the financial year, with overall output expanding 4.1% in April-February. Growth accelerated from 3.1% in the first half to 5.2% in the second half, supported by policy easing and a cut in GST rates. However, elevated crude prices and geopolitical risks may weigh on growth going forward, particularly through higher input costs and potential supply disruptions.

 

The Centre’s fiscal deficit widened to ₹12.53 trillion in April-February, accounting for 80.4% of the revised full-year estimate, compared with 85.8% in the same period last year. The deficit in February rose 53.0% year-on-year to ₹2.71 trillion, driven by a sharp decline in net tax revenues, which fell 54.5% year-on-year to ₹510 billion.

Total receipts in April-February rose 9.6% to ₹27.92 trillion, with net tax revenue increasing 6.4% to ₹21.45 trillion. Total expenditure grew 3.9% to ₹40.45 trillion, below the revised estimate growth of 6.7%. Within spending, revenue expenditure rose 1.1% to ₹31.15 trillion, while capital expenditure increased 14.5% to ₹9.29 trillion. The fiscal trend so far suggests the government is on course to meet its revised fiscal deficit target of ₹15.58 trillion in 2025-26.

 

 

Tax collections weakened in February, primarily due to a decline in direct taxes. Total tax collections fell 19.2% year-on-year to ₹1.78 trillion during the month, with corporate tax collections plummeting 96.2% to ₹6 billion and income tax collections declining 45.2% to ₹431 billion.

As of the end of February, total tax collections stood at ₹34.20 trillion, up 6.7%, slightly below the revised estimate growth assumption. To meet the full-year target of ₹40.78 trillion, collections would need to accelerate in March. At the current pace, total collections in 2026-27 would fall short of the target by around ₹300 billion.

 

Electricity generation from conventional sources declined 1.2% year-on-year to 134.49 billion kWh, led by a 2.2% drop in thermal generation. This marks the second consecutive monthly decline in electricity generation. Over time, the share of conventional sources in total generation has been gradually falling amid increased reliance on renewables. In 2025-26, electricity generation from conventional sources declined 2.3% to 1,537.11 billion kWh.

 

Domestic air passenger traffic rose marginally by 0.2% year-on-year to 14.07 million in February. In April-February, domestic airlines carried 153.06 million passengers, up 1.5% from a year earlier.

India’s services trade surplus narrowed to $17.84 billion in February from $21.53 billion in January, as imports grew faster than exports. Services imports rose 16.2% year-on-year to $16.87 billion, while exports increased 9.7% to $34.71 billion. Meanwhile, the merchandise trade deficit narrowed to $27.10 billion, resulting in an overall deficit of $9.26 billion.

Bank lending rates eased marginally in February. The weighted average lending rate on fresh rupee loans declined by 5 basis points to 8.44%, while rates on new term deposits edged down 1 basis point to 5.65%. The yield on the 10-year benchmark government bond softened by around 4 basis points to 6.66%.

Since the start of the monetary easing cycle in February 2025, lending rates on fresh loans have declined by 89 basis points, compared with a cumulative 125-basis-point reduction in the policy repo rate. Deposit rates have fallen 97 basis points over the same period.

 

Bank credit growth remained strong across sectors. Credit to industry accelerated to 13.5% as of February 28, while credit to services rose to 16.3%. Growth in agriculture credit increased to 12.3%.

Net sales growth of 7,992 listed private non-financial companies improved to 7.8% in 2024-25 from 6.3% a year earlier. Sales growth of the manufacturing and services sectors increased to 6.3% and 10.1%, respectively.

Net profit rose 23.1% in 2024-25, supported by high non-operating income and lower tax expenses. Companies in the services sector recorded a net profit growth of 40.2%, compared with 12.8% for the manufacturing sector. Companies continued to deleverage, with the aggregate debt-to-equity ratio easing to 29.8% from 32.8% in the previous year.

India’s foreign exchange reserves declined to an 11-week low of $688.06 billion as of March 27, reflecting likely market intervention by the Reserve Bank of India and valuations losses due to lower gold prices. The rupee had fallen to a then all-time low of 94.84 per dollar in the week to March 27. Total reserves declined $10.29 billion during the week, with foreign currency assets falling $6.62 billion to $551.07 billion and gold declining by $3.67 billion to $113.52 billion.

 

Summer crop area fell 4.7% year-on-year to 4.99 million hectares as of March 27. Rice, which accounts for over 40% of the total summer crop area, fell 7.1% to 2.85 million hectares. Pulses rose 8.2% to 0.61 million hectares, while oilseeds fell 5.8% to 0.60 million hectares.

 

Pre-monsoon rainfall has improved after a weak start, with cumulative precipitation for March 1-April 3 at 37.6 mm, 14% above the long-period average of 33.0 mm. Reservoir storage levels, though declining, remain well above historical norms. As of April 2, water levels in 166 reservoirs stood at 85.69 billion cubic metres, or 47% of their total live capacity — 16% higher than a year earlier and 27% above the 10-year average. These reservoirs are typically replenished during the southwest monsoon.

 

 

Coming up

• Apr 6: HSBC India Services, Composite PMI for March
• Apr 13: Consumer Price Index for March
• Apr 14: Wholesale Price Index for March 

Tailpiece
India’s unemployment rate fell to 3.1% in 2025 from 3.2% a year earlier. Unemployment rate in rural areas fell to 2.4% from 2.5%, while in urban areas it fell to 4.8% from 5.0%.