INDIA STRATEGY : Economic Indicators: war’s impact reflecting in pockets

Research evidence excerpt

INDIA STRATEGY : Economic Indicators: war’s impact reflecting in pockets

High frequency indicators

Industry indicators – March/April trend confirms the slowdown

We are now seeing a visible slump in the industrial indicators. IIP is at its lowest since

Oct-25, driven by a slowdown in manufacturing. Core industry growth has turned

negative in Mar-26. Though PMI has recovered from Mar-26 lows, it is still trending near

a multi‑year low, driven by rising input costs. Steel & cement production and new order

growth declined y-y, GST collection growth in Apr-26 was low y-y and flat m-m; whereas

PV production remains robust and electricity generation improved.

Rural indicators – softening

Rural indicators are turning softer over the past couple of months. Food CPI is rising,

Kharif‑crop’s MSP growth has been weaker than consesus (BBG) expectations, and

agriculture exports slumped by 14% y-y in Apr-26 and fertilizer sales have increased by

c19% due to higher cost. Agriculture credit has increased by c16% y-y in Apr-26. IMD

has forecasted below normal rainfall (90-95% of long period average) for 2026. Weather

forecasters around the world are predicting severe EL Nino conditions for 2026 which

would have a further negative impact on the rural economy. However, higher government

stock of food grains should partially address these concerns. Tractor sales and wage

growth data remain strong in Mar-26.

Service indicators – resilient so far; moderation ahead

Services PMI reached a five‑month high but remains lower than the sentiment levels

seen last year. Domestic activity saw demand improvement, but international demand

remains weak. Growth in E-way bills declined y-y for the 2nd consecutive month. Traffic

activities across port, rail and airlines have moderated.