India’s economic prospects for FY26 are well balanced and the country has displayed steady economic growth. As per the first advance estimates of national accounts, India’s real GDP is estimated to grow by 6.4 per cent in FY25. The growth in the first half of FY25 was supported by agriculture and services, with rural demand improving on the back of record Kharif production and favourable agricultural conditions. “Fiscal discipline and strong external balance supported by a services trade surplus and healthy remittance growth contributed to macroeconomic stability. Together, these factors provided a solid foundation for sustained growth amid external uncertainties,” the Economic Survey 2024-25 document stated.
India’s fiscal and monetary strategies too are pivoting towards supporting economic growth, aligning with expectations of a cyclical recovery, as highlighted in a report by Morgan Stanley. The Budget 2025 has also advanced fiscal consolidation while implementing measures to boost consumption and expand capital expenditure, fostering economic growth.
The economic growth outlook will be further shaped by key data that are slated to be released on 21 February (Friday). A host of data including PMI numbers for manufacturing and services sectors, foreign exchange reserves and also the Monetary Policy Meeting Minutes, will be released this Friday.
Key economic data/ announcements on Feb 21:
HSBC Manufacturing PMI Flash: The manufacturing PMI data will be released on February 21. According to data released by S&P Global, India’s manufacturing activity showed signs of recovery in January, with the Purchasing Managers’ Index (PMI) for the month at a six-month high of 57.7. The rate of expansion was the quickest since last July and outpaced its long-run average. The figure had plunged to a 12-month low of 56.4 in December, down from 56.5 in November.
HSBC Services PMI Flash: The services PMI numbers will be released on February 21. In January, service providers in India recorded a loss of growth momentum. The HSBC India Services Business Activity Index, or services PMI for the month fell to 56.5 from 59.3 in December. However, the headline figure was down from 59.3 in December to its lowest level since November 2022.
Foreign Exchange Reserves: With Indian foreign exchange reserves (Forex) having increased by $1.510 billion and touching $658.091 billion till the week that ended on November 29, per the Reserve Bank of India, the data is keenly expected on February 21. Earlier in February, RBI Governor Sanjay Malhotra had said that foreign exchange reserves rose for a second straight week and stood at $630.6 billion as of January 31.
Monetary Policy Meeting Minutes: The December MPC minutes showed that two members of the RBI MPC, Nagesh Kumar and Ram Singh, had called for a 25 basis point reduction in the repo rate to 6.25 per cent, citing concerns over India’s slowing economic growth and softening inflation. The two members had also proposed exploring non-rate measures, such as a reduction in the cash reserve ratio (CRR), to enhance liquidity and boost lending. Later during the February meeting, the MPC announced its decision to cut the key interest rate by 25 bps to 6.25 per cent from 6.50 per cent. The RBI maintained a ‘Neutral’ stance. The Monetary Policy Meeting Minutes will be released on February 21.