GST Slips, Sales Slide—But Manufacturing Roars: India’s Mixed Economic Signals

India’s economic momentum softened in June 2025, with several high-frequency indicators flashing caution. While the broader outlook remains optimistic, the latest data suggests a temporary deceleration in consumption and investment activity.

 

Key Highlights:

 

GST collections grew just 6.2%, the slowest pace in over four years, signaling tepid demand.

Car sales fell 6% year-on-year, while UPI transactions dipped both in volume and value compared to May.

Industrial output growth slowed to a nine-month low of 1.2% in May, dragged down by weak manufacturing and contractions in mining and electricity.

Power consumption declined 1.5%, and sales of summer appliances like air conditioners and refrigerators dropped sharply due to milder weather.

However, manufacturing PMI surged to a 14-month high of 58.4, driven by strong output and new orders, offering a silver lining.

 

Economists view this as a transitory slowdown, with expectations of a rebound in the coming months. Factors like a favorable monsoon, easing inflation, and potential monetary policy support from the RBI are expected to reignite momentum. The central bank has projected FY26 GDP growth at 6.7%, while private economists peg Q1 growth at around 6.8%, aided by a low base.

 

Despite the June dip, India’s fundamentals remain intact. With rising public capex and improving rural demand, the economy could regain its stride heading into the festive season.

 

Source: The Economic Times, Business Standard, Inventiva