Week in Numbers: Tracking India’s Economic Pulse

Growth in India’s key infrastructure industries remained feeble, constrained by weakness in the energy and power sectors. The eight core industries index, which accounts for 40.3% of the Index of Industrial Production’s weight, grew 1.8% year-on-year in November, compared with a contraction of 0.1% a month earlier.

Overall output was dragged down by contractions in crude oil, natural gas, refinery products, and electricity generation. Steel and cement, which are closely linked to construction activity, continued to outperform, expanding by 6.1% and 14.5%, respectively.

The eight core industries index grew 2.4% during April-November, compared with 4.4% in the same period last year. The lacklustre performance of core sectors is likely to keep industrial growth muted. Industrial growth had fallen to a 14-month low of 0.4% in October.

Renewable energy generation, including large hydroelectric projects, rose 19.8% year-on-year to 30.42 billion units in November, driven by a 44.2% jump in wind energy output to 4.48 billion units. Solar generation increased 17.2% to 13.19 billion units, while output from large hydro projects rose 13.7% to 9.82 billion units. All-India electricity generation, including thermal and nuclear sources, stood at 132.47 billion units in November, down 1.6% year-on-year. Renewables accounted for 23.0% of total electricity generation, up from 18.9% a year earlier.

India’s domestic air passenger traffic rose 6.9% year-on-year to 15.24 million in November. This was the highest monthly passenger count on record. During April-November, domestic airlines carried 109.44 million passengers, up 2.0% from a year earlier. Passenger traffic is likely to decline sharply in December, following significant service disruptions reported by IndiGo.

Growth in bank credit accelerated to 11.7% year-on-year as of December 12, the fastest pace in over a year, up from 11.5% a fortnight earlier. Deposit growth moderated to 9.7% from 10.2% over the same period. Typically, lending growth accelerates and deposit growth slows following interest-rate cuts. The Reserve Bank of India reduced the repo rate by 25 basis points to 5.25% on December 5.

 

Net foreign direct investment recorded an outflow for the third consecutive month in October, driven by higher outward investment and repatriation. Net FDI outflows eased marginally to $1.55 billion from $1.66 billion in September. Overseas investment by Indian companies moderated to $3.09 billion from $4.05 billion, while repatriation increased to $5.00 billion from $4.61 billion. Gross FDI inflows softened to $6.54 billion from $7.00 billion a month earlier. For April-October, net FDI inflows stood at $6.20 billion, compared with $3.27 billion a year earlier, while gross inflows rose to $58.32 billion from $50.54 billion.

The rupee remained broadly stable in real terms in November, as nominal depreciation was offset by relatively higher domestic inflation. The 40-currency trade-weighted real effective exchange rate(REER) index stood at 97.51 in November, unchanged from a month earlier, suggesting some degree of undervaluation. The rupee depreciated 0.8% against the dollar during the month, weighed down by dollar strength, subdued foreign portfolio flows, and uncertainty surrounding an India-US trade deal.

India’s foreign exchange reserves rose to an eight-week high of $693.32 billion as of December 19, an increase of $4.37 billion from the previous week. Foreign currency assets rose by $1.64 billion to $559.43 billion, while gold reserves increased by $2.62 billion to $110.37 billion. Despite continued RBI intervention, reserves have risen by $24.99 billion so far in 2025-26, largely reflecting valuation gains in gold.

Reserve money growth accelerated to 2.2% year-on-year as of December 19, from 1.6% a week earlier, driven by an increase in currency in circulation to ₹37.24 trillion.

Although rainfall was markedly deficient in November and December, post-monsoon rainfall remained above normal due to early-season showers. As of December 26, cumulative rainfall stood at 134.0 mm, 13% above the long-period average of 118.4 mm. Rainfall was 49% above normal in October, but 49% below normal since then.

Reservoir storage continued to decline but remained well above historical averages. As of December 26, 166 reservoirs held 147.04 billion cubic metres of water, 7% higher than a year earlier and 23% above the 10-year average.

As sowing nears completion, rabi acreage remained marginally higher than a year ago. As of December 19, the area under rabi crops stood at 58.07 million hectares, up 1.4% year-on-year. Wheat acreage rose 0.4% to 30.16 million hectares, while pulses and oilseeds increased by 3.0% to 12.67 million hectares and by 0.7% to 9.33 million hectares, respectively. 

 

Coming up:

• Dec 28 – Index of Industrial Production for November
• Dec 31 – Government finances for Apr-Nov
• Jan 1   – GST collections for December
• Jan 2   – HSBC India Manufacturing PMI for December 

Tailpiece
Declining crude oil and natural gas production have weighed on the economy for over a decade. In the past 13 years, crude oil production has contracted in 12, whereas natural gas production has declined in eight. Both are expected to contract again in 2025-26.