Strong economic indicators back India's growth story
New Delhi, July 2
The latest economic indicators released by the Union government continue to underline the resilience of the Indian economy despite global uncertainties.
Strong GDP growth, expanding manufacturing and services activity, record vehicle sales, healthy GST collections and resilient exports indicate that domestic demand and investment remain robust.
India's economy grew by 7.7 per cent in FY 2025-26, reaffirming its position as the world's fastest-growing major economy.
Growth gathered further momentum in the final quarter, with real GDP accelerating to 7.8 per cent in Q4 FY26, up from 7 per cent in the corresponding quarter of the previous year, driven by strong performance in manufacturing, services, consumption and investment.
The HSBC India Manufacturing PMI stood at 54.2 in June 2026, remaining above the 50-point mark for the 37th consecutive month, indicating sustained expansion in manufacturing activity.
The survey highlights continued growth in output, new orders, employment and purchasing activity, reflecting resilient domestic demand and positive business confidence despite global uncertainties.
The HSBC India Services PMI Business Activity Index rose from 58.8 in April to 59.8 in May 2026, recording the strongest expansion since November 2025.
India's Index of Industrial Production (IIP) accelerated from 4.9 per cent in April to a five-month high of 5.1 per cent in May 2026.
The growth was led by a 5.5 per cent expansion in manufacturing and 9.9 per cent growth in electricity and gas supply. Within manufacturing, sectors such as motor vehicles and electrical equipment posted a robust double-digit growth.
On the demand side, capital goods output grew by 12.9 per cent, reflecting sustained investment momentum and strengthening industrial capacity.
The government's capex push has continued strongly into FY 2026-27. In April-May 2026, capital expenditure stood at Rs 2.51 lakh crore, compared to Rs 2.21 lakh crore in April-May 2025. That is an increase of around Rs 29,650 crore in just the first two months.
The capex push is going into core infrastructure such as roads, railways, telecom, defence and other infrastructure sectors remain central to the Union government's public investment strategy.
Tax collections remained strong despite global uncertainty. Gross tax revenue in April-May 2026 was higher than last year, showing that the revenue base remains stable.
In June 2026, Gross GST collection rose 13.9 per cent to around Rs 1.95 lakh crore in June this year, compared to Rs 1.71 lakh crore in the same month last year.
Net direct tax collections jumped 14.64 per cent to Rs 5.21 lakh crore in the current fiscal till June 17, aided by healthy growth in both corporate and non-corporate tax receipts.
Despite temporary pressures from global energy prices and the West Asia situation, easing crude oil and fertiliser prices have supported the Union government's commitment to its FY 2026-27 fiscal consolidation roadmap.
Trade and logistics activity remained robust, with e-way bill generation growing 10.9 per cent year-on-year in May, reflecting sustained movement of goods and economic activity.
Automobile sales remained strong through April-June 2026. April saw vehicle retail sales of 26.11 lakh units, making it the highest-ever April for India's auto retail market.
Rural demand continued to expand, with rural automobile sales growing 7.8 per cent in May, indicating continued strength in the rural economy despite a high base.
— IANS
Reader Comments
I'm happy to see the rural automobile sales growing by 7.8% - that's a clear sign that demand is spreading beyond cities. But I hope this translates into better jobs and wages for the common man, not just corporate profits. Let's see how the next few quarters play out.
Impressive numbers across the board. The manufacturing PMI staying above 50 for 37 consecutive months is remarkable. India is truly becoming a global manufacturing hub. The capex push into roads and railways is exactly what's needed for long-term growth.
Great to see the services PMI at 59.8 - 'bohot acha'! But I'm also keeping an eye on global crude prices and the West Asia situation. If those flare up, it could put pressure on our fiscal consolidation. Let's hope the government stays disciplined with spending.
Numbers are good, no doubt. But for the average person, rising inflation and stagnant wages still pinch. The government must ensure that this growth is inclusive. Rural demand is picking up, which is encouraging, but we need more job creation in the formal sector. Let's see!
The e-way bill generation growing 10.9% year-on-year is a fantastic proxy for real economic activity. India's digital infrastructure is enabling this efficiency. Add to that the record vehicle sales - the momentum is real. Kudos to the policymakers!
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.