Week in Numbers: Tracking India’s Economic Pulse

India’s industrial growth accelerated to a 25-month high of 6.7% in November, driven by double-digit expansion in capital goods, infrastructure goods, and consumer durables. Industrial production had grown by 0.5% in October and 5.0% in November last year. Manufacturing output, which accounts for over three-fourths of the Index of Industrial Production weight, rose to a 25-month high of 8.0%. Mining output increased 5.4% in November, while electricity generation contracted 1.5% during the month.
 

Capital goods, infrastructure goods, and consumer durable goods grew by 10.4%, 12.1% and 10.3%, respectively, in November, indicating a strengthening in investment activity and consumption demand. 

The sharp acceleration in industrial growth is notable given that the eight core industries index, which carries a 40.3% weight in the IIP, expanded by just 1.8% year-on-year in November. However, other high-frequency indicators signalled an improvement in industrial momentum. Automobile production growth climbed to a 21-month high of 22.3% in November, while growth in e-way bill generation rose to a 25-month high of 27.6%.

Industrial production grew 3.3% in April-November, compared with 4.1% in the same period last year. Year-to-date growth remains below the long-term average of 4.0%.

India’s manufacturing PMI lost growth momentum at the end of 2025, contrasting with the strong industrial output data for November. The HSBC India manufacturing PMI fell to a two-year low of 55.0 in December, down from 56.6 in November, as production growth reached a 38-month low amid competitive pressures and subdued sales.

Growth in new orders rose at the weakest pace since December 2023, while output increased at the slowest pace since October 2022. Part of the slowdown in total sales reflected a softer increase in international orders, with new export orders rising at the slowest pace in 14 months. A softer increase in new business intakes prompted companies to limit purchases.

 

The central government’s fiscal deficit rose 15.4% year-on-year to ₹9.77 trillion in April-November, accounting for 62.3% of the Budget target of ₹15.69 trillion for the full year. The increase was primarily driven by slower growth in total receipts, particularly net tax revenue. Total receipts rose 2.9% year-on-year to ₹19.49 trillion during the period, even as net tax revenue declined 3.4% to ₹13.94 trillion. The Budget had assumed net tax collections would grow 13.5% in 2025-26.

The Centre, however, has some flexibility on net tax collections because it front-loaded tax devolution to states earlier in the year. Tax devolution rose 15.3% year-on-year to ₹9.37 trillion in April-November, even though gross tax collections increased by only 3.3% during the period.

Total expenditure in April-November rose 6.7% year-on-year to ₹29.26 trillion, slightly below the 8.8% growth projected in the Budget for the full year. Expenditure growth was primarily driven by a 28.2% year-on-year increase in capital expenditure to ₹6.58 trillion.

Although public finances appear strained, the government may still meet the fiscal deficit target of 4.4% of GDP for the year by tightening expenditure. 

Despite this, it is increasingly evident that tax collections will fall well short of the Budget assumptions for 2025-26. Total tax collections stood at ₹23.36 trillion at the end of November, up 3.3% year-on-year — far below the 12.5% growth assumed in the Budget. Tax collections in November declined 2.8% year-on-year to ₹2.20 trillion.

 

The weak tax performance so far this year is mainly due to a contraction in goods and services tax collections following the reduction in GST rates implemented on September 22. GST collections, excluding state GST, declined 2.0% year-on-year to ₹6.65 trillion in April-November.

To meet the full-year target of ₹42.70 trillion, tax collections would need to grow 26.0% in the remaining four months of the year. If collections grow at the current pace for the full year, the shortfall in 2025-26 would be around ₹3.5 trillion. Even a 10% growth in the remaining months would leave a gap of about ₹2.5 trillion.

India’s GST collections rose year-on-year in December, suggesting that lower rates have been largely offset by higher consumer demand. Total collections, including cess, rose 1.3% to ₹1.79 trillion in December. Excluding cess, collections grew 6.1% to ₹1.74 trillion. Cess collections slumped 63.0% to ₹45.51 billion. In the GST overhaul implemented in September, the government subsumed most cesses into GST rates, except for tobacco products. The cess on tobacco products will be merged with excise duty, effective Feb. 1.

Net GST collections declined 3.0% to ₹1.50 trillion in December. Total GST collections in April-December rose 6.7% to ₹17.43 trillion, while net collections rose 4.7% to ₹15.13 trillion.

Inflation based on CPI for Industrial Workers rose to 2.56% in November from a 15-month low of 2.21% in October, driven primarily by a 0.7% month-on-month increase in the food and beverages index. India’s CPI (Urban), which is more comparable to CPI for Industrial Workers, rose to 1.40% in November from 0.88% in October.

 

The government’s major subsidies rose 3.3% year-on-year to ₹2.88 trillion in April-November, accounting for 75% of the Budget estimate of ₹3.83 trillion for the full year. Food subsidy declined 9.5% to ₹1.37 trillion, while fertiliser subsidy rose 17.3% to ₹1.42 trillion.

 

Bank lending rates rose for the second consecutive month in November despite widespread expectations that the Reserve Bank of India would cut interest rates in December. The average lending rate on fresh rupee loans rose 10 basis points to 8.71% in November, while the average rate on new term deposits rose 2 basis points to 5.59%. The weighted average lending rate of scheduled commercial banks has moderated by only 62 basis points from February to November, despite the 100-basis-point cut in the policy repo rate during the period. In contrast, the average deposit rate on new term deposits fell by 103 basis points.

 

India’s services trade surplus narrowed to $17.39 billion in November from $17.44 billion in October. Services exports rose 6.7% year-on-year to $34.26 billion, while imports contracted 2.1% to $16.88 billion.

 

Bank credit to industry moderated to 9.6% year-on-year as of November 28 from 10.0% a month earlier, though it was higher than 8.3% a year ago. Loans to the services sector also moderated to 11.7% from 13.0% a month ago and 12.8% a year ago. Growth in credit to the agriculture sector eased to 8.7% from 8.9% a month ago and 15.3% a year ago.

India’s external debt rose to $746.0 billion at the end of September, up $32.8 billion from a year earlier. External debt stood at 19.2% of GDP, compared with 19.0% a year ago. Short-term debt based on residual maturity accounted for 41.6% of total external debt and 44.4% of foreign exchange reserves.

 

India’s foreign exchange reserves rose to a 10-week high of $696.61 billion as of December 26, an increase of $3.29 billion from the previous week. Foreign currency assets rose by $184 million to $559.61 billion, while gold reserves increased by $2.96 billion to $113.32 billion. Despite continued RBI intervention, reserves have risen by $28.28 billion so far in 2025-26, largely reflecting valuation gains in gold.

 

The post-monsoon rainfall this year was above normal due to heavy showers in October. The country received a cumulative rainfall of 134.2 mm in October-December, 11% above the long-period average of 121.0 mm for the period. Rainfall was 49% above normal in October, but 43% below normal in November and 69% below normal in December.

Reservoir storage continued to decline but remained well above historical averages. As of January 1, 166 reservoirs held 142.18 billion cubic metres of water, 6% higher than a year earlier and 23% above the 10-year average.

 

As the rabi sowing season nears the end, acreage was marginally higher than a year ago. As of December 26, the area under rabi crops stood at 61.43 million hectares, up 1.1% year-on-year. Wheat acreage was almost flat at 32.27 million hectares, while pulses and oilseeds rose by 2.8% to 13.34 million hectares and by 1.1% to 9.43 million hectares, respectively. 

 

Coming up:

• Jan 6 – HSBC India Services, Composite PMI for December 
• Jan 7 – First advance estimate of GDP for FY26
• Jan 12 – Consumer Price Index for December 

Tailpiece
The government has left interest rates on small savings schemes unchanged for the eighth consecutive quarter in January-March, despite the RBI cutting the policy repo rate by 125 basis points during the period. This has created a significant gap between the interest rates on these instruments and their formula-based rates. In the Oct-Dec quarter, the difference ranged from 0.27 percentage points to 1.44 percentage points.