New Delhi, July 2: Recent economic indicators released by the central government reveal that the Indian economy is progressing robustly despite global uncertainties. Strong GDP growth, expansion in manufacturing and services, record vehicle sales, improved GST collections, and stability in exports indicate a continually strengthening domestic demand and investment environment.
In the fiscal year 2025-26, India’s economy grew at a rate of 7.7%, making it the fastest-growing major economy in the world. The growth rate accelerated in the last quarter, with real GDP growth reaching 7.8%, surpassing the 7% recorded in the same quarter last year. This growth was significantly driven by manufacturing, services, consumption, and investment.
The manufacturing sector in the country remains strong. The HSBC India Manufacturing PMI stood at 54.2 in June 2026, maintaining a level above 50 for the 37th consecutive month. This indicates a continuous expansion in manufacturing activities.
According to the survey, there has been consistent growth in production, new orders, employment, and purchasing activities, reflecting strong domestic demand and business confidence despite global challenges.
Positive trends were also observed in the services sector. The HSBC India Services PMI Business Activity Index rose from 58.8 in April to 59.8 in May 2026, marking the fastest expansion since November 2025.
Industrial production continues to improve. The Index of Industrial Production (IIP) increased from 4.9% in April to 5.1% in May 2026, the highest level in the past five months. This growth was supported by a 5.5% increase in the manufacturing sector and a 9.9% rise in electricity and gas supply. Additionally, sectors like motor vehicles and electrical equipment recorded strong double-digit growth.
Moreover, capital goods production saw a significant increase of 12.9%, indicating a surge in investment activities and industrial capacity expansion.
The central government’s capital expenditure (capex) campaign is also progressing rapidly in the new fiscal year. During April-May 2026, capital expenditure reached ₹2.51 lakh crore, compared to ₹2.21 lakh crore in the same period last year. This means an additional capital investment of approximately ₹29,650 crore was made in just two months.
The government’s investment primarily focuses on infrastructure sectors such as roads, railways, telecommunications, defense, and others, forming a crucial part of its public investment strategy.
Despite global uncertainties, tax collections remain robust. Gross tax revenue during April-May 2026 was higher than the previous year, indicating a stable revenue base for the government.
In June 2026, gross GST collections rose by 13.9% to approximately ₹1.95 lakh crore, up from ₹1.71 lakh crore in June last year.
As of June 17, net direct tax collections for the current fiscal year increased by 14.64% to ₹5.21 lakh crore, with significant growth recorded in both corporate and non-corporate tax collections.
Despite the challenges posed by conditions in West Asia and pressures from global energy prices, the easing of crude oil and fertilizer prices has aided the government in progressing towards its fiscal consolidation targets for the fiscal year 2026-27.
Trade and logistics activities also remain strong. In May, the number of e-way bills registered an annual increase of 10.9%, indicating robust movement of goods and economic activities across the country.
The automobile sector continues to show strong demand. Between April and June 2026, vehicle sales performed well, with retail sales reaching 2.611 million vehicles in April, the highest figure for any April in India’s auto retail market history.
Positive trends are also evident in the rural economy. In May, automobile sales in rural areas increased by 7.8%, suggesting that rural demand remains strong despite a high base.
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