The Ministry of Finance released the monthly economic review for June on Monday. The review shows that resilient domestic supply and demand fundamentals are in the first quarter of FY26.
Further, the inflation remained within the target range in the first quarter of FY26, with the CPI inflation reaching a 77-month low in June. Further, a favourable monsoon in the year has resulted in a higher Kharif sowing in June.
Inflation in June
Retail inflation, Consumer Price Index-based, eased down to 2.1 per cent in June, the lowest in the last 77 months. Earlier in May, retail inflation stood at 2.8 per cent.
Further, the retail inflation in Q1FY26 stood at 2.7. This was well below the Reserve Bank of India’s projected inflation rate of 2.9 per cent for the quarter. However, the Wholesale Price Index fell into deflation in June, recording -0.1 per cent in the month.
Manufacturing and service sector
Backed by export demand, India’s manufacturing remained on the higher side in the first quarter of the fiscal year 2026. The Manufacturing PMI average stood at 58.1 in the quarter. This was comfortably above the threshold of 50.
The manufacturing PMI in June is recorded at 58.4 in June, while it was at 57.6 in May. The manufacturing PMI in June was the highest in the last 14 months. The manufacturing PMI growth in June and the first quarter was supported by a sharp rise in export orders.
The service sector PMI in the first quarter stood at an average of 59.3. The service sector growth in the quarter was aided by domestic demand, along with a robust export demand.
Agriculture activity boost
According to the Indian Meteorological Department, the southwest monsoon reached all parts of the country by June, 9 days ahead of the normal monsoon cycle. This led to an early Kharif sowing and a 10 per cent higher sowing activity in June.
Kharif sowing by 18 July reached 36.1 million hectares in the season. Fertiliser and seed sales reached 48.9 million tonnes and 164.05 lakh quintals by mid-July.
Current account balance
India’s current account saw a surplus of 13.5 billion in Q4FY24. This was a turnaround from a deficit of $11.3 billion in the previous quarter.
India’s current account deficit in the first quarter of the fiscal year came down to $23.3 billion against $26 billion in the same period of the previous fiscal year. The improvement in the current account deficit was largely driven by high service exports and private remittances.