Week in Numbers: Tracking India’s Economic Pulse

The Indian economy grew at an unexpectedly strong 8.2% in July-September, the fastest pace in six quarters. This was sharply higher than the consensus estimate of 7.4% and the 7.0% projected by the Reserve Bank of India. The Indian economy had grown 7.8% in the previous quarter.

The gross value added rose 8.1% during the quarter, led by 9.2% growth in services and 7.7% in industry. The growth was lifted by robust consumer spending, front-loading of production ahead of GST rate cuts, festival demand, and the punitive tariffs imposed by the US.

With the Indian economy growing at 8.0% in the first half, GDP growth in 2025-26 is likely to be higher than the 6.8% projected by the RBI. Even if the RBI’s projected growth rate of 6.2-6.4% in the second half holds, full-year growth will be around 7.1%.

The growth so far this financial year has been much faster than what most high-frequency indicators had suggested. Industry output has grown just 3.0%, exports by 6.5%, tax collections by 2.8%, and automobile sales by 0.6% over the same period.

The nominal growth, which many consider a better indicator of momentum, slowed to a four-quarter low of 8.7% in July-September. The slowdown was primarily due to low inflation, with the GDP deflator moderating to a five-year low of 0.5% in July-September.

The sharply higher-than-expected GDP growth will put the RBI’s Monetary Policy Committee, which meets next week, in a quandary between high growth and inflation at record lows.

The central government’s fiscal deficit widened to ₹8.25 trillion at the end of October, accounting for 52.6% of the full-year target. At the end of October last year, the fiscal deficit was 46.5% of the year’s target. The fiscal deficit was 9.9% higher year-on-year. The Budget has projected the fiscal deficit in 2025-26 to decline 0.5% to ₹15.69 trillion.

The government’s total expenditure rose 6.1% to ₹26.26 trillion in April-October, driven by a 32.4% increase in capital expenditure to ₹6.18 trillion. Total receipts increased 4.5% to ₹18.00 trillion, aided by a larger-than-projected surplus transfer from the Reserve Bank of India. The central bank transferred a record ₹2.69 trillion in the current financial year. Net tax revenues contracted 2.4% to ₹12.74 trillion, mainly due to muted collections and the front-loading of devolution to states.

Gross tax collections grew 4.0% to ₹21.14 trillion in April-October, well below the increase of 12.5% projected in the Budget. The slowdown is primarily due to muted growth in collections of goods and services tax and a decline in customs duty.

Gross tax collections in October grew 13.8% year-on-year to ₹2.49 trillion. To meet the Budget target of ₹42.70 trillion in 2025-26, tax collections will need to grow at an annualised rate of 22.3% in the remaining five months of the year — not an easy task, escpecially considering income tax reliefs and recent GST rate cuts.

 

After declining for three straight months, India’s domestic air passenger traffic rose 2.7% year-on-year to 14.03 million in October. In absolute terms, passenger traffic in October was the highest in five months. Domestic airlines carried 94.20 million passengers during April-October, up 1.3% from a year earlier. 

 

Housing prices eased in the country in July-September, with the RBI’s all-India House Price Index falling to 112.7 from 113.4 a quarter earlier, mainly due to declines in Kolkata, Chennai, Lucknow, and Hyderabad. The index rose 2.2% year-on-year in July-September compared with 7.0% a year ago. On a quarter-on-quarter basis, the index declined 0.6%.

Sales growth of listed private non-financial companies improved to 8.0% year-on-year in July-September from 5.5% a quarter ago and 5.4% a year ago. Sales of 1,775 listed private manufacturing companies rose by 8.5% in July-September compared with 5.3% in the previous quarter and 3.3% a year ago, mainly driven by higher sales performance in automobiles, food products, electrical machinery, and the chemical industry.

Information Technology companies registered a 7.8% increase in sales during the quarter, up from 6.0% in the previous quarter. Sales of non-IT services companies grew 10.6% in July-September, up from 7.5% in the previous quarter, primarily due to stronger growth in wholesale and retail trade companies.

Growth in operating profit of manufacturing and IT companies improved to 10.6% and 7.7%, respectively, while it moderated to 6.5% for non-IT services companies during the quarter. Operating profit margins improved sequentially for IT companies during July-September, while they moderated in the manufacturing and non-IT services segments.

The number of unincorporated non-agriculture establishments in the country rose to 79.7 million in July-September from 79.4 million a quarter ago and 78.5 million in January-March. The number of workers in these establishments remained largely unchanged at 128.6 million in July-September, but declined from 131.3 million in January-March. Of these workers, 60.0% were self-employed, 25.9% were hired workers, and 14.1% were others, including unpaid family members. Female workers accounted for 28.7% of total employment during the quarter. Unincorporated non-agricultural establishments are those not incorporated under the Companies Act. They include proprietorships, partnerships, self-help groups, co-operatives, societies, and trusts.

Net FDI outflow from India rose to $2.38 billion in September from $622 million in August, due to higher outward FDI and increased repatriation. FDI by Indian companies overseas increased to $3.78 billion from $1.74 billion, while repatriation rose to $5.20 billion from $4.93 billion earlier. Gross FDI, however, rose to $6.60 billion in September from $6.05 billion a month ago. Net FDI inflows into India in April-September, the first half of 2025-26, rose to $7.64 billion from $3.40 billion in the same period last year. Gross FDI inflows rose to $50.36 billion from $43.37 billion in the same period.

India’s services trade surplus narrowed to $17.44 billion in October from a nine-month high of $18.83 billion in September. Services exports rose 2.2% year-on-year to $35.17 billion, while imports increased 2.9% to $17.73 billion.

 

The rupee appreciated marginally in real-effective terms in October, mainly due to gains in the nominal effective exchange rate. The 40-currency trade-weighted real effective exchange rate (REER) index rose to 97.47 in October from a near-seven-year low of 97.40 in September, suggesting that the currency is undervalued. The dollar index rose almost 2% in October amid uncertainty over the US Federal Reserve's rate cut cycle and a prolonged government shutdown. Despite the dollar’s strength, the Indian rupee remained largely steady against the dollar in October, mainly due to the RBI's continued market intervention. 

 

India’s foreign exchange reserves fell $4.5 billion to $688.10 billion as of November 21, primarily because of a fall in gold prices and the RBI’s continued intervention in the market to curb sharp depreciation in the rupee. Foreign currency assets fell $1.69 billion to $560.60 billion, while gold reserves declined $2.68 billion to $104.18 billion. Reserves have increased by $19.78 billion so far in 2025-26 even though the value of gold reserves increased by $26.01 billion during the period.

 

Lending rates hardened in October despite the RBI indicating that it had policy space for further rate cuts in its last monetary policy. The average lending rate on fresh rupee loans rose 14 basis points to 8.64% in October. However, the average deposit rate on new deposits fell 4 basis points to 5.57% in October. The weighted average lending rate of scheduled commercial banks has moderated by 69 basis points from February to October, compared with the 100-basis-point cut in the policy repo rate. In contrast, the average deposit rate on new deposits fell by 105 basis points.

 

Bank credit to industry increased 10.0% year-on-year as of October 31, compared with 8.1% a year ago. Loans to the services sector increased 13.0% versus 12.5% during the same period. However, growth in credit to the agriculture sector declined to 8.9% from 15.5% a year ago.

Growth in bank loans inched up to 11.4% year-on-year as of November 14 from 11.3% a fortnight ago. Growth in bank deposits rose to 10.2% from 9.7% a fortnight ago.

 

Growth in money supply increased to 9.8% year-on-year as of November 14 from 9.3% a fortnight ago. Reserve money growth increased to 1.8% year-on-year as of November 21 from 1.4% a week earlier. Currency in circulation rose 8.6% year-on-year to ₹38.62 trillion as of November 21.

The above-normal southwest monsoon this year pushed up kharif food grain production to a record 173.33 million tonnes. Food grain output rose 2.3% year-on-year, driven by record production of rice and maize. According to the first advance estimate by the agriculture ministry, rice production is estimated at 124.50 million tonnes, up 1.4% year-on-year while maize is estimated at 28.30 million tonnes, up 14.1%.

However, pulse production is estimated to decline by 4.1% to 7.41 million tonnes, and oilseed production is projected to fall by 1.6% to 27.56 million tonnes. India is deficient in both pulses and oilseeds and relies on imports to meet domestic demand.

India’s combined food grain production in 2024-25 (July-June) stood at a record high of 357.73 million tonnes.

India’s horticulture crop production rose 4.0% year-on-year to 369.06 million tonnes in 2024-25 (July-June), driven by a 26.9% increase in onion output to 30.79 million tonnes. Potato production rose 1.8% to 58.11 million tonnes, while tomato output declined 8.7% to 19.47 million tonnes. Total vegetable production rose 4.1% to 215.68 million tonnes, while fruit output increased 5.1% to 118.76 million tonnes in 2024-25.

Rabi acreage was robust, supported by ample post-monsoon rainfall and healthy reservoir levels. As of November 21, the area under rabi crops was at 30.63 million hectares, up 12.3% year-on-year. The area under wheat, the key rabi crop, rose 19.9% to 12.84 million hectares. Pulses acreage rose 7.6% to 7.34 million hectares, and oilseeds increased 5.4% to 7.66 million hectares.

After an initial burst, post-monsoon rainfall has slowed but remains well above normal. As of November 28, cumulative rainfall stood at 127.7 mm, 23% above the normal of 103.9 mm.

Reservoir storage continued to fall but remained well above normal. As of November 27, the 162 reservoirs held 161.22 billion cubic metres, or 88% of live capacity — 7% higher than a year earlier and 21% above the 10-year average.

Coming up:

• Dec 1   – GST Collections for November
• Dec 1   – HSBC India Manufacturing PMI for November
• Dec 3   – HSBC India Services, Composite PMI for November
• Dec 12 – Consumer Price Index for November 

Tailpiece
India’s services sector’s relative share in GVA is increasing at the expense of agriculture and industry. The services sector accounted for 59.2% of GVA in July-September — the highest ever. Agriculture’s share fell to 11.0% from 14.1% in the second quarter of 2011-12, while industry declined to 29.2% from 32.8% over the same period.