India Watch: India growth meter – Towards greener pastures

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India Watch

India growth meter – Towards greener

pastures

Data momentum turns visibly green on our heatmaps

03 August 2026

Even as the global environment remains uncertain, we continue to see reasonably strong

momentum in high frequency growth indicators. While we see some pick up in CPI in

June – some comfort can be derived from the pickup in the pace of monsoon progress in

July faring better than expected at 3% above of normal. Progress in August remains key

to watch for both rural activity as well as inflationary pressures. RBI MPC in the

upcoming policy is likely to deliver a neutral hold, in our view, given the volatile global

backdrop and the evolving inflationary and Fed outlook.

GEM Economics

Asia | India

June-July data held up, early July data shows strength

In June, economic data held up strongly in services side, with fuel consumption picked up

along with normalization indicated in the trade data as the conflict de-escalated for a brief

period. Air traffic growth however was slow amid a smaller flight schedule, however cargo

traffic gained momentum, along with industrial production rose to a 23M high to 7.3% in

June with Q1FY27 averaging at 5.7% while Q4FY26 stood at 3.9% indicating an uptick in

the momentum. Within industrial production, manufacturing (+7.8% yoy) and electricity

(+10.6% yoy) growth led the surge, while auto sales, both for two wheelers and four

wheelers were reasonably robust. Foreign reserves also improved to USD682bn in third

week of July (+13bn vs June) supported by strong inflows on the FCNRB flows (USD 40.2bn

of inflows. On the fiscal front, capex in 1Q fell remained frontloaded with 24% yoy with

GST collections (ex cess) remained robust at 15.4% yoy in July. Weakness is most visible in

sentiment indicators, as both PMI services and manufacturing (slipped to ~5-year low) saw

sequential declines in July. Meanwhile, selling prices inched up even as cost pressures

receded to 5-month low (though transportation costs remained high).

Sectoral dashboard shows recovery as headwinds recede

With a fuller set of data, our sectoral growth diffusion dashboard points to improving

…