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Global geopolitical turbulence such as trade wars, cross-border tensions and protectionist policies has posed challenges for the Indian economy over the last 6 months. However, strong domestic fundamentals and proactive policies have ensured resilient growth, with India maintaining one of the highest GDP growth rates among the developed nations. India’s economy has displayed resilience in the transition from Q4 FY24-25 (Jan–Mar 2025) to Q1 FY25-26 (Apr–Jun 2025).
A close reading of GDP dynamics, trade, inflation, industrial performance, and external sector indicators highlights India’s progress in this period.
| Quarterly Figures – Release Date | Q4 FY24-25 (Jan-March’25) | Q1 FY25-26 (April-June’25) | |
| Nominal GDP Growth Rate | 9.7% | 8.80% | |
| Real Growth rate | 6.4% | 7.8% | |
| Real GDP Value (Constant Prices) | ₹44 lakh crore | ₹47 lakh crore | |
| Nominal GDP Value (Current Prices) | ₹79.08 lakh crore | ₹86.05 lakh crore | |
| GDP COMPONENTS: (a+b+c+d) | |||
| a) | Private Final Consumption Expenditure (PFCE) (60.2% of GDP) (₹ Lakh Crore) | ₹47.51 | ₹51.86 |
| b) | Gross Capital Formation (GCF) (31.4% of GDP) (₹ Lakh Crore) | ₹24.19 | ₹26.19 |
| c) | Government Final Consumption Expenditure (GFCE) (9.6% share of GDP) (₹ Crore) | ₹7.9 | ₹8.6 |
| d) | Balance of Trade (Exports – Imports) (₹ Lakh Crore) | ₹-1.8 | ₹-1.62 |
| CPI Inflation YoY | 3.16% | 1.55% | |
| WPI Inflation | 1.78% | 0.51% | |
| CRR | 4% | 4% | |
| Interest rate/Repo Rate | 6% | 5.5% | |
| Manufacturing PMI | 58.3 | 59.8 | |
| Services PMI | 61.2 | 65.6 | |
| 10 Year Bond Yield | 6.25 | 6.54% | |
| FOREX RESERVES BREAKUP (a+b+c+d) | US $668.3 billion | US $698.5 billion | |
| a) | Foreign Currency Assets (FCA) (86% weight) | $581.65 billion. | $589.42 billion |
| b) | Gold Reserves (12.9% weight) | $86.33 billion | $86.31 billion |
| c) | Special Drawing Rights (SDRs) (2.8% weight) | $18.49 billion | $18.75 billion |
| d) | Reserve Tranche Position with IMF (0.65% weight) | $4.371 billion | $4.45 billion |
| Gold Reserves | 880 tonnes | 880 tonnes | |
| Fiscal Deficit | 4.8% | 4.4% | |
| Unemployment | 7.9% | 5.20% | |
| Government Debt to % of GDP | 81.59 | 81.59 | |
| IIP YoY% Electricity | 10.8% | -1.5% | |
| IIP YoY% Mining | 7.9% | -3% | |
| IIP YoY% Manufacturing | 4.3% | 3.30% | |
| INR/USD (Average) | 83.32 | 85.58 | |
| Current Acct to % of GDP | 1.3% | -1.2% | |
| GDP Per Capita ($) (Nominal GDP/Population) | $4.19 trillion/1.43 bn people = $2,878 | $4.19 trillion/1.43 bn people = $2,878 | |
| PPP GDP per capita (PPP GDP/Population) | $17.65 trillion/1.43 bn ppl = $12,132 | $17.65 trillion/1.43 bn ppl = $12,132 | |
| FDI (USD Bn) | 17.4 | NA | |
| Population | 1386 Mn | 1399 Mn | |
| Yield Spread (10 Yr bond yield India) – (U.S.10 Yr Bond Yield) | 1.77% | 2.29% |
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GDP Growth:
Nominal GDP growth remained robust at 9.7% in Q4 FY24-25, edging slightly lower to 8.8% in Q1 FY25-26. In real terms, growth improved significantly from 6.4% to 7.8% in Q1 FY25-26, marks the fastest expansion in five quarters, significantly above expectations of 6.5–6.7%. Contributing factors include front-loaded government spending, robust domestic demand, and a booming services sector. However, with upcoming challenges of US tariffs can bring a potential slowdown in exports or private consumption.
- Inflation and Monetary Policy: CPI Inflation declined from 3.16% in Q4 to 1.55% in Q1, well below the RBI’s target range, reflecting softening food and fuel prices. WPI Inflation fell from 1.78% to 0.51%, indicating easing wholesale and input costs. Lower inflation allowed the RBI to shift stance, cutting the repo rate from 6% in Q4 to 5.5% in Q1, while the CRR remained steady at 4%. This accommodative policy aims to support investment and growth.
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Industrial Output and PMI Trends:
Electricity output contracted from +10.8% in Q4 to -1.5% in Q1, reflecting lower seasonal demand after the winter.
Mining fell from +7.9% to -3%, indicating supply constraints.
Manufacturing slowed only marginally, from 4.3% to 3.3%, highlighting resilience in factory output despite weaker exports.
Manufacturing PMI rose from 58.3 to 59.8, showing confidence in domestic production.
Services PMI surged from 61.2 to 65.6, underlining India’s services sector strength, especially IT and financial services.
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External Sector and Exchange Rate:
Current Account Balance: improved to a 1.3% surplus of GDP in Q4, but slipped into a -1.2% deficit in Q1, driven by widening trade gaps.
INR/USD: weakened from 83.32 (Q4) to 85.58 (Q1), pressured by stronger dollar dynamics and capital outflows.
FDI: moderated, with inflows of USD 5.9 billion in Q4, with Q1 figures yet to show momentum.
Forex reserves remained robust, increasing from USD 668.3 billion to USD 698.5 billion across the two quarters.
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Financial Markets and Yields:
The 10-year Indian bond yield climbed from 6.25% in Q4 to 6.54% in Q1, reflecting inflation expectations and global rate uncertainty.
The yield spread (India 10Y minus U.S. 10Y) widened from 1.77% to 2.29%, making Indian bonds relatively attractive despite rupee volatility.
- Fiscal Position and Employment: India’s fiscal deficit narrowed from 4.8% of GDP in Q4 to 4.4% in Q1, signals fiscal discipline. Notably, unemployment dropped sharply from 7.9% in Q4 to 5.2% in Q1, suggesting improved labour market absorption, driven by services and infrastructure activity.
These pieces are being published as they have been received – they have not been edited/fact-checked by ThePrint.