India’s economy maintained robust momentum in FY25, with real GDP rising by 6.5%, according to the Finance Ministry’s Monthly Economic Review for May 2025. High-frequency indicators like fuel consumption, PMI data, and e-way bill volumes reflect steady expansion.
Inflation Softens Further; CPI Drops to 2.8% in May
Retail inflation declined for the seventh consecutive month, easing to 2.8% in May – its lowest since February 2019. Food inflation followed suit, falling below 1%, marking the weakest rate since October 2021 and reinforcing disinflationary trends.
Exports Up 2.8% in May; External Sector Remains Resilient
India’s total exports grew 2.8% year-on-year in May 2025 to USD 71.1 billion. Foreign exchange reserves remained strong at USD 699 billion as of mid-June, offering import cover of 11.5 months and covering 97.4% of external debt.
Rural Demand Gains Ground; Services Sector Stable
Rural consumption showed resilience, with May tractor sales up 9.1% and two-wheeler sales growing 7.3% year-on-year. The services sector remained steady, with the Services PMI at 58.8, indicating continued expansion in economic activity.
Construction Activity Slows; Steel Consumption Grows
Construction momentum moderated in recent months, though steel demand rose 7% in April–May 2025. Slower growth in cement output points to a tempered pace of infrastructure development during the same period.
Economic Outlook Positive Despite Global Headwinds
The Indian economy remains on a firm footing, backed by strong domestic demand, lower inflation, and a healthy external sector. Still, global challenges such as policy uncertainty, trade friction, and geopolitical risks continue to cloud the global outlook.