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2025-09-12 16:31:15
[Dun & Bradstreet: India's economy exhibits broad-based endogenous momentum, and inflationary pressures continue to ease] ⑴ Dun & Bradstreet's August 2025 Economic Insights report shows that India's GDP grew by 7.8% year-on-year in the first quarter of fiscal year 2026, with the Index of Industrial Output (IIP) increasing by 3.5% in July. Manufacturing, particularly in the basic metals, electrical equipment, and non-metallic mineral products sectors, performed particularly well. ⑵ The IIP is expected to grow by 6% in August, primarily due to stable demand in the construction sector and a low base effect. The government plans to introduce new Goods and Services Tax (GST) reforms before Diwali in October, aiming to reduce taxes on essential goods, packaged foods, and electronics. ⑶ CPI inflation fell to 1.6% in July, the lowest level in over eight years, with rural and urban inflation rates falling to 1.2% and 2.1%, respectively, and food inflation turned negative. ⑷ The Wholesale Price Index (WPI) fell by 0.6% in July and is expected to remain negative at -0.2% in August, reflecting softening input costs and falling global mineral oil prices. 5. In August, the 10-year Treasury bond yield remained stable at 6.4%, and the 91-day Treasury bill yield remained at 5.4%. Bank credit growth is expected to accelerate to 11.2% from 9.6% in July. 6. The Indian rupee is expected to average 87.2 rupees per dollar in September, slightly stronger than 87.4 rupees per dollar in August. 7. Although the 50% tariff imposed by the United States on Indian exports, effective August 27, may impact the textile, jewelry, and electronics sectors, India is mitigating the impact by exploring new trading partners in Africa, Latin America, and East Asia. 8. The central bank maintained the repo rate at 5.5% and a neutral policy stance. Liquidity remained abundant, with 1.79 trillion rupees absorbed through the standing deposit facility and reverse repo operations. 9. Dun & Bradstreet's Global Chief Economist noted that India's growth trajectory remains stable, but maintaining momentum requires responding to external shocks and seizing opportunities for structural transformation. ⑽ GST rationalization reform is expected to boost urban consumption, offset export losses caused by rising tariffs, and support rural demand, which has already shown resilience.
