India’s Growth Pulse: Tracking India’s Economic Momentum

India’s Growth Pulse: Tracking India’s Economic Momentu

September 2025
4th Issue
15 min read

Contributors

Manasa Sriram

Lead Editor

Yash Khandelwal

Author

Karthik Chopra

Co-author

Shagun Vishwanath

Policy Spotlight Author

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Executive Summary

The September 2025 edition of India’s Growth Pulse tracks India’s economic performance through August 2025, highlighting a phase of strong macroeconomic momentum supported by robust GDP growth, investment-led expansion, GST rationalisation, improving labour participation and narrowing external imbalances. The edition positions India as being in a period of balanced, reform-backed growth, where low inflation, infrastructure momentum and rising foreign investment create policy space for continued structural reforms. At the same time, the report flags the need to carefully manage monsoon-linked agricultural risks, global supply-chain pressures and fiscal discipline.

Key Developments

Real GDP grew strongly at 7.8% in Q1 FY26, supported by broad-based expansion across services, manufacturing, construction and agriculture.
The economy showed signs of shifting from consumption-led growth towards investment-led expansion, with Gross Fixed Capital Formation growing 7.8% in Q1 FY26.
GST 2.0 reforms rationalised the earlier four-slab structure into simplified rate categories, reducing taxes on everyday goods, consumer durables, agricultural machinery, renewable energy devices and life-saving medicines.
Gross GST collections in August 2025 rose 6.5% year-on-year to ₹1.86 lakh crore, while weaker net direct tax collections were attributed largely to higher refund issuance rather than economic weakness.
The Index of Eight Core Industries grew 6.3% year-on-year in August 2025, driven by steel, coal and cement.
The labour market improved, with unemployment easing to 5.1% and female labour force participation rising to 33.7%.
The overall trade deficit narrowed by 54.53% to $9.88 billion, supported by total export growth and strong services exports.
Retail inflation remained contained at 2.07%, while WPI turned positive at 0.52% after two months of deflation.

Key Takeaways

India’s August 2025 economic performance reflects a favourable mix of strong growth, controlled inflation and improving fiscal and external indicators.
GST rationalisation is positioned as both a consumer welfare and economic competitiveness reform.
Investment-led growth and infrastructure momentum remain central to India’s medium-term growth story.
Policymakers must continue to manage agricultural volatility, global supply-chain risks and fiscal discipline to sustain the momentum.