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Economy Watch
Economy Watch provides an in-depth review of salient developments in India’s macroeconomy and economic policy in a global context.
It has established itself as a thought leadership publication, providing valuable inputs for policymakers in the central and state governments, academicians, industry and businesses and other stakeholders.
Economy Watch was launched for public distribution soon after demonetization. The February 2025 issue marked its 100th edition.
It covers various macro-fiscal dimensions of the Indian economy including growth, inflation, government finances, external trade, monetary and financial sectors. It places India in a comparative economic framework using selected developed and developing countries.
Two innovative indices have been developed to capture changes in aggregate demand and macroeconomic imbalances in the Indian economy. The analysis in the Economy Watch is based on monthly, quarterly and annual data sourced from national and international sources.
Every month, a focused theme of contemporary economic importance is identified for a deep and insightful analysis which provides useful inputs and recommendations.
Economy Watch November 2025 Highlights
- In October 2025, manufacturing and services PMI were at 59.2 and 58.9 respectively, remaining well above the neutral mark of 50 and their respective long-run averages.
- Reflective of higher growth in industrial activity, IIP growth improved to 4.1% in 2QFY26 from 2.0% during 1QFY26, largely driven by higher growth in manufacturing and electricity output.
- Headline CPI inflation fell to a historic low (2012 base series) of 0.3% in October 2025 led by favorable base effects in inflation in vegetables, while core CPI inflation remained elevated at 4.4% during the month.
- WPI inflation turned negative at (-)1.2% in October 2025 from 0.1% in September 2025, reflecting sustained contraction in wholesale food prices, attributable to a rich harvest and a slower pace of inflation in non-food articles and manufactured food products.
- GoI’s gross tax revenues (GTR) grew by 2.84% during 1HFY26 with a growth of 3.08% in direct taxes and 2.77% in indirect taxes.
- GoI’s total expenditure grew by 9.1% during 1HFY26, with growth in revenue expenditure at 1.5% and that in capital expenditure at 40%.
- GoI’s fiscal and revenue deficits during 1HFY26 stood at 36.5% and 5.2% of their respective annual budget estimates.
- Growth in gross bank credit improved to 10.4% in September 2025 from 10.0% in August 2025.
- Net FDI outflows were higher at US$2.4 billion while net FPI outflows were lower at US$0.7 billion in September 2025 as compared to outflows of US$0.6 billion and US$3.4 billion respectively in August 2025.
- Merchandise exports showed a contraction of (-)11.8% in October 2025, while merchandise imports growth remained relatively stable at a high level of 16.6%.
- Merchandise trade deficit widened to an unprecedented high of US$41.7 billion in October 2025 from US$32.1 billion in September 2025.
- Average global crude price fell to a five-month low of US$63/bbl. in October 2025, reflecting an oversupplied market and sluggish global growth. However, in end-October 2025, there was a temporary spike in oil prices owing to the announcement of a new set of US sanctions on Russian oil companies.
- IMF projected global growth at 3.2% in 2025 and 3.1% in 2026 with India’s FY26 and FY27 growth rates forecasted at 6.6% and 6.2%, respectively.
- 1HFY26 real GDP growth is likely to be close to 7.5% with 2QFY26 growth expected to exceed 7%. RBI’s 2HFY26 growth projection is at 6.3%. This may imply an annual real GDP growth of 6.8% or marginally above for FY26.
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