Macro Economic Overview

Inflation across BRICS nations has been moderating in recent months. India’s headline CPI inflation rate hit a historic low of 0.25%, largely influenced by steep drop in food inflation (-5.0%) and GST rate cuts. Core CPI (excluding food and fuel) inched up to 4.4% led by higher gold prices while core inflation (excluding gold, silver, petrol and diesel) moderated to 2.6%.

YoY% change in Consumer price inflation for BRICS

India's fiscal health appears to be on a path of consolidation and stability, with the government demonstrating a commitment to fiscal responsibility while continuing to prioritize economic growth. The key deficit indicators of the union government, viz., gross fiscal deficit (GFD), revenue deficit and primary deficit witnessed an improvement during April-June 2025 over the corresponding period of the previous year.

General Government Fiscal Balance as a Percentage of GDP

Note:
1) Data for India is for the respective fiscal years. For example: 2024 pertains to the fiscal year FY25 (April 2024 to March 2025) and so on. For all other countries, the data pertains to calendar year.
2) Definition of General Government fiscal balance as a % of GDP: IMF defines this as Net lending (+)/ borrowing (-) is calculated as revenue minus total expenditure. This is a core GFS balance that measures the extent to which general government is either putting financial resources at the disposal of other sectors in the economy and nonresidents (net lending), or utilizing the financial resources generated by other sectors and nonresidents (net borrowing). This balance may be viewed as an indicator of the financial impact of general government activity on the rest of the economy and nonresidents (GFSM 2001, paragraph 4.17). Note: Net lending (+)/borrowing (-) is also equal to net acquisition of financial assets minus net incurrence of liabilities.
3) General Government includes Centre, States and Local Governments.
4) Positive balance indicates surplus, negative balance indicates deficit.
5) Projections for Brazil, France, India, Japan and UAE start after year 2023 and for all other countries it starts after 2024.

Source: IMF World Economic Outlook – April 2025

Since the start of this calendar year, policy rates have trended lower across BRICS economies, with Brazil being the only exception. Most major advanced economies have held status quo in November, barring South Africa which reduced policy rates by 25bps. Indian rates are down 100 bps in this calendar year. The RBI has maintained status quo on rates in the previous two MPC meetings in August and October.

Nominal policy repo rate

India’s PMI indices remained in expansionary phase, signalling steady underlying momentum. Manufacturing and Services PMI has been in the expansion zone for over four years with the 12-month average of 57.9 and 59.5 respectively, reflecting broad-based activity expansion across both sectors.

Trends in India’s PMI Manufacturing, Services and Composite Index

Indian forex reserves are the fifth largest in the world at ~US$ 690 bn in October, a marginal dip from US$700 in September, providing a cushion against external vulnerabilities. INR has depreciated by 4.5% so far this calendar year till November 2025 and has been touching fresh record lows in recent months.

Monthly Trends in India’s forex reserves and 12M rolling average exchange rate