June 2025: A Clear View of Economic Direction of India
India’s economy continued to grow in June 2025, supported by the latest data from the HSBC Flash India Composite Output Index, which reached 61.0. This index tracks activity in both manufacturing and services sectors and shows that overall business conditions are improving steadily.
This marks the 14th month in a row that the index has stayed above 50, which indicates expansion. Manufacturing continues to lead, showing strong performance. The services sector also improved, reaching its best level in the past ten months.
Several key trends are driving this growth. Domestic demand has increased, with more new orders being placed by Indian businesses. In addition to that, exports have risen significantly. This is the strongest export growth since 2014, suggesting Indian products and services are gaining more acceptance in international markets.
Employment is also growing, especially in the manufacturing sector, where hiring is at its highest point ever recorded. This indicates that the growth is having a real impact on workers. Although job growth in the services sector has slowed slightly, overall employment conditions remain positive.
Businesses are becoming more competitive by adopting new technologies and improving their strategies. These efforts are helping them adapt to changes and operate more effectively in a fast-moving market.
Inflation, which had been a concern earlier, is now easing. The cost of inputs has dropped to a ten-month low. This gives businesses a chance to keep prices stable and helps consumers manage their daily expenses better. It also allows the Reserve Bank of India more room to make supportive economic decisions.
There are still some concerns. Confidence in future growth has declined a little, especially among service providers. This reflects some uncertainty about global economic conditions. However, India’s overall position remains strong, with growing demand, increased exports, steady hiring, and falling input costs.
To sum up, the data from June 2025 suggests that India is not only maintaining its growth but also building a stable foundation for the future. The current trends show a balanced and sustainable economic path.
Back Kolkata Loses Another Piece of Its Banking Backbone
Kolkata, once a major financial center during British rule, is again seeing signs of decline in its role within India’s banking sector. The latest concern comes from the State Bank of India’s (SBI) decision to shift its Global Market Unit (GMU) from Kolkata to Mumbai. This move has raised concerns among civil society groups and local stakeholders who fear this is part of a larger pattern.
The Bank Bachao Desh Bachao Manch, a civil group, has pointed out that the relocation could lead to an estimated Rs 25 crore annual loss in State GST revenue for West Bengal. However, the financial impact is only one part of the issue. The decision may also result in around 70 contractual workers losing their jobs. These include workers who clean the premises, manage security, and offer day-to-day support services.
This isn't the first time an institution has reduced its presence in Kolkata. Over the years, many banks have shut down regional offices or moved major units elsewhere. These repeated changes are slowly taking away from the city’s financial importance.
In 2008, there was an agreement to keep the GMU in Kolkata. Now, with that commitment being overlooked, many are questioning how such decisions are being made. SBI has said the shift is due to "operational and administrative needs," but critics say this explanation lacks clarity and transparency.
Public sector banks like SBI have a wider responsibility than private companies. Their actions affect not just their operations but also government revenues, job markets, and regional economies. In a state like West Bengal, which already faces several development challenges, the exit of a major banking unit can create serious long-term effects.
Kolkata's banking history is long and important. It played a big role in shaping the financial systems of the country. The gradual removal of such institutions risks weakening the city’s identity as a financial hub.
When a public institution makes a major change that affects revenue and livelihoods, it should be explained clearly and decided with input from the people it affects. Otherwise, the loss isn’t just physical — it becomes part of a larger trend of decline that is harder to reverse.
Back Measuring Progress by People, Not Just Profits
India's economy is growing fast, and it is expected to soon become the fourth-largest in the world. This is a significant achievement that reflects the country’s improving economic position. However, a recent report by Llama Research, “India’s Growth: Journey from Size to Strength,” points out an important issue — not all Indians are experiencing the benefits of this growth in their daily lives.
While total national income is rising, the average income per person remains low. This means that the wealth created is not reaching everyone equally. It also suggests that the country’s economic success is not automatically improving the standard of living for most people.
The report does not criticize the progress made, but it does highlight that real development must include everyone. Growth that helps only a few is incomplete. For the economy to truly advance, more people need access to steady jobs, better incomes, good healthcare, and quality education.
India has already taken some strong steps in the right direction. Initiatives like Jan Dhan, Aadhaar, and mobile banking (the JAM trinity) have connected millions of people to financial systems. Government schemes like the Production-Linked Incentive (PLI) program are designed to boost manufacturing and create more jobs.
India’s young population is another advantage. If this group receives proper training and opportunities, they can drive further growth. But for this to happen, the government must continue investing in education, health services, and skill development, especially in rural and semi-urban areas.
There are still major challenges. Many people still do not earn enough or have reliable access to social benefits. Farming remains inefficient, and a large part of the workforce is still employed in informal jobs that offer little protection. The gap between rich and poor, and between different regions, is still wide.
Programs like Ayushman Bharat, MGNREGA, and Skill India have helped, but they need to become long-term systems rather than short-term fixes. More effort is needed to ensure these initiatives reach the people who need them most and work effectively.
The message of the Llama Research report is clear: India’s progress should not just be about having a larger economy, but about making life better for all its people. By 2047, when India hopes to be a developed nation, success should be measured not only by GDP, but by how much the quality of life has improved for every Indian.
Back Indian Economic Outlook: A Revised Look
ICRA, a major credit rating agency, recently updated its economic forecast for India's fiscal year 2025-26. While earlier reports hinted at GDP growth exceeding 6.5%, the more detailed figures released around June 18-20, 2025, show a slightly adjusted projection: 6.2% for real GDP growth and 6.0% for Gross Value Added (GVA) growth. This adjustment is not a cause for concern but rather a more precise prediction based on current economic factors.
ICRA's assessment considers both global and local conditions. A primary reason for the slight moderation in growth estimates is the slower pace of merchandise exports. The global economy is still recovering, which is limiting international trade and impacting India's overall growth. However, India's services exports are expected to remain strong, offering important support to the country's trade balance.
The main driver of India's economy, according to ICRA, is domestic demand. Rural demand is expected to stay robust, thanks to good Rabi crop yields and healthy water reserves. This means farmers will have more income, boosting overall spending. Additionally, the income tax relief from the Union Budget 2025-26 and potential RBI interest rate cuts could lead to lower loan payments for households. These factors are expected to increase disposable incomes, further fueling consumer activity.
Another significant contributor to growth is government spending on infrastructure. The central government plans to increase its capital expenditure by 10.1% in FY2025-26. This consistent public investment creates a solid base for economic activity, generating jobs and supporting related industries. While private sector investment might be more cautious due to global uncertainties, the government's ongoing spending provides crucial support.
ICRA's forecast also touches on inflation, expecting the Consumer Price Index (CPI) to remain above 3.5% (or potentially higher, depending on specific reports), with the Wholesale Price Index (WPI) also showing moderate pressure. This indicates that monetary authorities will need to keep a close eye on prices. On the fiscal front, the projected fiscal deficit is 4.4% of GDP for FY2025-26, showing the government's commitment to managing its finances responsibly while still investing in growth. The Current Account Deficit (CAD) is expected to be stable, between 1.2% and 1.3% of GDP, reflecting controlled import growth and steady service exports.
In conclusion, ICRA's latest forecast for India in FY2025-26 highlights stability and careful management. Despite global trade challenges, strong demand within the country and consistent government investment are expected to create a solid foundation for economic growth.
Back Indian Market: Relaxed, Not Reckless
On June 19, 2025, a subtle yet significant shift occurred in the Indian stock market. The India VIX, an indicator that measures expected market swings, dipped below 14. This might not sound like major news, but it reveals a lot about the current investor mood. Even with global issues and decisions from the US Federal Reserve, this drop suggests investors feel much more at ease about the market.
Think of the VIX as a way to check the market's stress levels. A high VIX means investors anticipate big ups and downs, like a storm brewing. But when it falls, especially below 14, it's like the weather turning calm and clear. This recent drop, to â‚ą13.98, shows a more relaxed sentiment than we've seen since April. Back then, strong growth numbers and improved credit ratings were attracting foreign investment.
This calmer VIX indicates that investors are less worried. Despite ongoing tensions in regions like the Middle East and economic debates in Washington, Indian investors appear to be handling these situations well. This isn't a careless attitude; it's a quiet confidence that the market's fundamental strength is solid. When the VIX is below 15, it usually signals smoother times ahead, meaning traders don't expect sudden, significant changes.
For long-term investors, this calmer environment is favorable. With less implied volatility, the chances of sharp market drops seem lower, making it a more comfortable time to hold existing investments or even add to a portfolio. For options traders, a lower VIX means options are cheaper to buy, which is good for those purchasing them. However, it can be more challenging for those selling options unless volatility picks up again.
Generally, a falling VIX encourages simply following market trends rather than making defensive moves.
Looking at history helps us understand this trend. The VIX often reacts quickly to major events before settling down. For instance, earlier in June, geopolitical concerns briefly pushed it past 21, but it quickly fell back. Interestingly, June often sees less market turbulence. This pattern, combined with current low option prices, suggests short-term market stability.
However, calm periods can change rapidly. Markets are always dynamic. Global events can shift, and unexpected domestic news can emerge. These factors have the power to quickly alter investor sentiment and bring back the market swings everyone is currently happy to be without. But for now, India’s market appears to be in a relaxed state, feeling strong and steady even in an unpredictable world.
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