Week in Numbers: Tracking India’s Economic Pulse

The Indian economy, which has been grappling with fallout of the war in West Asia and higher crude oil prices, may now have to contend with a weak monsoon. The India Meteorological Department has lowered its forecast for southwest monsoon rainfall in 2026 to 90% of the long-period average from the 92% projected earlier. According to the weather department, there is a 60% probability of rainfall during the June-September period being deficient, at below 90% of the long-period average, and a 24% probability of it being below normal, at 90-95% of the long-period average. The probability of rainfall being normal, at 96-104% of the long-period average, is only 14%.

Of the four homogeneous regions, rainfall is most likely to be below normal in Central India, South Peninsular India, and Northwest India, and normal only in Northeast India. Spatially, average rainfall in June is likely to be below 92% of the long-period average.

The weather bureau has projected below-normal rainfall for the country as El Niño conditions are likely to develop during the monsoon season. El Niño is typically associated with weaker monsoon rainfall in India. The last time southwest monsoon rainfall was below 90% of the long-period average was in 2015.

The southwest monsoon has a direct bearing on agricultural production. The last time India’s foodgrain output declined year-on-year was in 2015-16, coinciding with the last deficient monsoon in 2015.

Meanwhile, the pre-monsoon season has been normal so far, with cumulative rainfall from March 1 to May 29 at 125.2 mm, largely unchanged from the long-period average of 125.8 mm. 

 

Domestic air passenger traffic contracted year-on-year for the second straight month in April, as the war in West Asia and higher airfares linked to rising crude oil prices continued to weigh on demand. Passenger traffic declined 3.5% to 13.82 million in April. In absolute terms, the traffic in April was the lowest in seven months. IndiGo, which accounts for 65.0% of the domestic market share, carried 8.98 million passengers in April, down 2.1% from a year ago.

 

 

Renewable energy generation, including large hydroelectric projects, rose 20.0% year-on-year to 40.14 billion units in April, driven by a 32.2% jump in solar energy output to 20.90 billion units. Wind generation increased 8.2% to 6.85 billion units, while generation from large hydro projects rose 11.9% to 10.76 billion units. Total electricity generation in April, including thermal and nuclear sources, increased 5.5% year-on-year to 166.30 billion units. Renewable sources accounted for 24.1% of total generation in April, up from 21.2% a year earlier, continuing their rising share in the power mix.

Bank lending rates hardened marginally in April, after a two-month gap. The weighted average lending rate on fresh rupee loans rose by 10 basis points to 8.50%, while the weighted average rate on new term deposits declined 30 basis points to 5.77%. Since the start of the monetary easing cycle in February 2025, lending rates on fresh loans have declined by 83 basis points, compared with a cumulative 125-basis-point reduction in the policy repo rate. Deposit rates have fallen 85 basis points during the same period.

 

Non-food bank credit slowed but remained strong, though it eased marginally to 15.8% year-on-year as of April 30 from 15.9% a month earlier. Credit to industry accelerated to 15.1% from 15.0% in the previous month, while credit to services slowed to 18.6% from 19.0%. Agricultural credit also moderated to 13.7% as of April 30 from 15.7% a month earlier.

Annual inflation based on the CPI for Industrial Workers rose to a 26-month high of 4.46% in April from 4.27% a month earlier, primarily on account of a sequential rise in prices of food and beverages and pan, tobacco, and intoxicants. Inflation based on the more widely followed CPI Combined rose to a 13-month high of 3.48% in April.

 

Housing prices continued to rise. The Reserve Bank of India’s all-India House Price Index increased 4.2% year-on-year in January-March, compared with a 3.6% rise a quarter earlier, driven mainly by gains in Nagpur, Chandigarh, Jaipur, and Kanpur.

 

India’s services trade surplus narrowed to $18.60 billion in April from $21.00 billion in March. Services exports rose 12.7% year-on-year to $37.02 billion in April, while imports increased 8.9% to $18.42 billion. India had a combined trade deficit of $9.78 billion in April, with a merchandise trade deficit of $28.38 billion.

 

 

India’s foreign exchange reserves fell to their lowest level in more than 13 months, reflecting continued dollar sales by the Reserve Bank of India to support the rupee, along with a decline in gold prices. The reserves dropped by $7.51 billion to $681.38 billion as of May 22. Foreign currency assets decreased by $2.87 billion to $543.03 billion, while gold reserves fell by $4.53 billion to $114.79 billion. India’s foreign exchange reserves have declined by more than $47 billion since late February, when the war in West Asia broke out.

 

As the season draws to a close, the area under summer crops was at 8.60 million hectares as of May 22, up 3.0% year-on-year. Area under rice, which accounts for about two-fifths of the total summer crop area, declined 4.2% to 3.11 million hectares. Pulses rose by 2.4% to 2.79 million hectares, while oilseeds increased 12.4% to 1.60 million hectares.

 

 

Reservoir storage levels remained well above historical norms on the eve of the monsoon season. As of May 29, live storage stood at 56.30 billion cubic metres, or 31% of total capacity, 1% higher than a year earlier and 19% above the 10-year average. The water level in reservoirs had increased during the corresponding week last year, as the monsoon had set in over Kerala on May 24.

 

Coming up:

• June 1: Index of Industrial Production for April
• June 1: HSBC India Manufacturing PMI for May
• June 5: Quarterly Estimates of GDP for January-March 

Tailpiece
India’s transition to electric mobility is gathering pace, though adoption remains concentrated in a handful of states. In April, five states – Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, and Rajasthan – together accounted for about 51% of the country’s total electric vehicle registrations.