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India
India’s economy continues to show strong signs of stability and resilience despite global uncertainties, according to EY’s latest Economy Watch report. The report highlights encouraging developments in inflation moderation, fiscal performance, and robust economic activity. It attributes this performance to the strength of both the manufacturing and services sectors. “Available high-frequency data for February and March 2025 point to an evolving scenario where the likelihood of maintaining India’s growth momentum appears to be strong. Reflective of a strong performance of both manufacturing and services activity,” the report stated.
Inflation Falls To Multi-Year Lows
One of the most significant trends identified in the report is the sharp decline in inflation. Retail inflation, measured by the Consumer Price Index (CPI), dropped to 3.3 per cent in March 2025—the lowest in 67 months. The report attributes this fall to declining vegetable and food prices. Core CPI inflation, which excludes food and fuel, also dipped to 4.1 per cent. The Wholesale Price Index (WPI) inflation eased to 2.0 per cent in March due to softening food and crude oil prices. These indicators suggest inflationary pressures are firmly under control.
Fiscal Data Shows Mixed Signals
The report highlights that the central government’s gross tax revenue rose by 10.9 per cent between April and February of FY25. However, capital expenditure showed limited growth at only 0.8 per cent. A sharp 35.4 per cent drop in February’s capital spending raised red flags. To meet revised targets, capital expenditure needs to rise by over 44 per cent in March. The fiscal deficit stood at 85.8 per cent of the annual target by February.
Economic Activity And Growth Outlook Strong
The manufacturing Purchasing Managers’ Index (PMI) rose to 58.1 in March, an eight-month high. Services PMI remained steady at 58.5. GST collections reached ₹1.96 lakh crore in March, the highest since April 2024. The report projects India’s GDP to grow at 6.5 per cent in FY26, supported by robust domestic demand, easing inflation, and moderate crude prices. “Our assessment is that with suitable fiscal and monetary policies, India may be able to sustain a real GDP growth at about 6.5 per cent in FY26,” the report noted.
(With Inputs From ANI)
