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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 June 2026 Highlights
- Real GDP and GVA grew by 7.8% and 7.9%, respectively, in 4QFY26, moderating marginally from 8.0% each in 3QFY26.
- Provisional estimates of national accounts data for FY26 show that real GDP (2022-23 base series) grew by 7.7% in FY26, increasing from 7.1% in FY25.
- In May 2026, manufacturing and services PMI increased to 55.0 and 59.8, marking three‑month and six‑month highs, respectively.
- As per the 2022-23 series, overall IIP growth increased to a four-month high of 4.9% in April 2026 as compared to 3.2% in March 2026.
- Monetary Policy Committee retained the repo rate at 5.25% while maintaining a neutral policy stance in its June 2026 review.
- Headline CPI inflation edged up to 3.9% in May 2026 from 3.5% in April 2026, reflecting pressures from prices of food and fuel.
- Under the new WPI series (base year 2022-23), headline wholesale price inflation increased to 9.7% in May 2026 from 8.3% in April 2026, reflecting a broad-based strengthening of price pressures across major commodity groups.
- GoI’s gross tax revenues (GTR) grew by 6.0% in FY26, lower than 7.4% as per the revised estimate. In April FY27, GoI’s GTR showed a contraction of (-)1.9% with direct taxes growing by 8.6% and indirect taxes contracting by (-)12.5%.
- GoI’s total expenditure grew by 5.4% in FY26, with growth in revenue expenditure at 6.5% and that in capital expenditure at only 1.6%.
- GoI met its fiscal and revenue deficit targets at 4.4% and 1.5% of GDP in FY26, respectively. In April 2026, GoI’s fiscal and revenue deficits as a proportion of the FY27 (BE) magnitude stood at 21.4% and 30.8%, respectively, their highest levels comparing the corresponding ratios since FY21.
- Gross bank credit showed a near stable growth of 16.0% in April 2026, close to its level of 16.1% in March 2026.
- Net FDI inflows surged to US$6.6 billion in April 2026 from US$0.9 billion in March 2026 while net FPI outflows continued to remain high at US$7.3 billion during the month.
- Merchandise exports and imports growth surged to 18.0% and 20.6%, respectively, in May 2026 from 13.8% and 10.0% in April 2026 led by sharp increase in engineering goods exports and crude imports.
- Merchandise trade deficit remained wide at US$28.2 billion in May 2026 close to US$28.4 billion in April 2026, reflecting elevated global crude prices and resilient domestic demand conditions.
- Average global crude price remained elevated at US$100.4/bbl. in May 2026 as compared to US$103.9/bbl. in April 2026.
- The OECD has projected global growth at 2.8% in 2026 and 3.1% in 2027, with India’s FY27 and FY28 growth rates forecasted at 6.3% and 6.4%, respectively.
- Considering the recent geopolitical developments, if global crude prices settle at relatively lower levels and shipments through the Strait of Hormuz normalize, the positive momentum of India’s growth prospects is likely to be restored. Supported by strong domestic economic fundamentals, resilient domestic demand, and improving global supply conditions, real GDP growth is expected to be in the range of 6.6–6.8% in FY27.
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E-volume : Indian economy sails through global headwinds: 2015 to 2025
E-volume : Landmarks in India’s economic reforms: 2015 to 2025
Union Budgets 2015 to 2025: Fiscal reforms for long-term impact
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