Bharat Barometer Aug'25: India's economy shows 59.3 Manufacturing PMI, 62.9 Services PMI, 10% credit growth, and 25% tractor sales growth

India’s economy in August 2025 reflected a mixed bag of trends, with some areas reflecting resilience and others experiencing difficulties. Although mainstays such as manufacturing and services kept growing and rural indicators were reviving, capital markets and foreign trade were struggling. This issue of the Bharat Barometer provides an overview of the main macroeconomic trends influencing India’s financial environment.

Macroeconomic Indicators (Score: 4/5)

• GST Collection: Growth was subdued, at a mid-single-digit rate of 6% in August 2025.
• CPI & WPI: The Consumer Price Index (CPI) increased marginally to 1% but remained low. The Wholesale Price Index (WPI) also went up marginally to 1%, having turned positive after two months in the deflationary zone.
• Unemployment: Both urban and rural unemployment decreased with urban unemployment reducing to 42% and rural unemployment reducing to 6.25%.
• PMI Trends: Both Manufacturing PMI (59.3) and Services PMI (62.9) increased, signaling strong expansion. The Composite PMI also went up to 2, showing strong overall business activity.

External Sector Trends (Score: 4/5)

• Exports & Imports: Goods exports growth increased to 10%, whereas goods imports recorded a robust growth of 14%. Services exports (10%) and imports (9%) also registered good growth.
• FII Inflows: Foreign Institutional Investor (FII) flows decreased further, with a substantial outflow of $3,994 million in August, the second consecutive month of net outflow.

Government Finances (Score: 1/5)

• Direct Tax Collection: Cumulative gross direct tax collection fell further into a degrowth zone at -4% year-on-year.
• Revenue & Capital Spending: Growth in revenue expenditure slowed to 8%, while capital spending growth dipped sharply to -10%.
• Subsidy Payments: Subsidy payments maintained their decline, having a degrowth of -15% in August 2025.

Industrial Activity (Score: 3/5)

• E-Way Bills: Growth in e-way bills remained robust at 22%, though it slowed slightly from last month.
• Industrial Production: Power generation registered a marginal increase of 1%, but coal offtake growth increased significantly to 8%.
• Energy & Materials: Petroleum products consumption rose marginally to 2%, and steel consumption was flat at 9% growth.

Demand & Consumption (Score: 2/5)

• Vehicle Sales: Total auto registrations increased modestly by 3%, though passenger vehicle sales growth was subdued
• Insurance Premiums: Growth of life insurance premium accelerated sharply with 22% growth during July, while non-life growth eased to 2%.
• Consumer Sentiment: Rural (125.4) and urban (108.7) consumer sentiments continued to strengthen, indicating strong consumer confidence

Banking & Money Flow (Score: 3/5)

• M3 Money Supply: Growth remained unchanged at 10%.
• Retail Payments: UPI transaction growth was robust at 34%. In particular, IMPS transactions recorded growth of 5%, bringing to an end 12 straight months of degrowth.
• SCB Credit & Deposits: Credit growth was steady at 10%, in line with deposit growth that was also constant at 10%.
• Fastag Collections: Value (19%) and volume (13%) growth in Fastag collections eased to low-teen levels

Rural Indicators (Score: 4/5)

• Reservoir Storage: Reservoir levels reflected extremely robust year-on-year expansion of 83% in July, but declined sharply to a mid-single-digit level of 5% in August.
• Rural Employment: Rural employment growth improved marginally to a mid-single-digit level of 5%.
• Agricultural Machinery: Tractor sales growth improved sharply to 25%, while two-wheeler sales growth was robust at 13%.
• Fertilizer Sales: Fertilizer sales growth recovered with an increase of 13%, after three successive months of decline.

Capital Markets (Score: 1/5)

• Mutual Funds: Equity mutual fund net inflows fell month-on-month with a degrowth of -13% but still remained positive. The number of net new SIPs registered fell sequentially to 1.41 million.
• Stock Market: Trading volume was weak and fell by -33%, recording the 10th straight month of degrowth.
• SIP Contributions: SIP growth continued to slow down but remained robust at 20%.