India's economy has demonstrated remarkable resilience and growth in recent days, with the private sector experiencing its fastest expansion on record in August 2025. The HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, surged to 65.2 in August from 61.1, marking the highest reading since the survey began in December 2005. This growth was largely fueled by a robust surge in demand, particularly within the dominant services sector, which saw its activity index soar to a survey high of 65.6.
Analysts and agencies anticipate India's Gross Domestic Product (GDP) growth for the April-June quarter of the current fiscal year (FY26) to be between 6.7% and 7%. This forecast aligns closely with the Reserve Bank of India's (RBI) projection of 6.5% and is supported by strong government capital expenditure, improved rural demand, and the continued resilience of the services sector. Morgan Stanley's Chief Asia Economist, Chetan Ahya, projects India's economic recovery to solidify by late 2025, bolstered by government initiatives and anticipated RBI rate cuts.
Despite the optimistic growth outlook, concerns regarding inflation persist. The recent PMI survey indicated that firms have hiked prices at the fastest rate in over 12 years, an increase that contradicts the recent trend of easing inflation reported in official data. The RBI, which targets inflation within a 2-6% range, is expected to consider further rate cuts, though managing low inflation remains a key focus. A recent RBI paper cautioned that raising the inflation target above 4% could undermine policy gains.
The Indian stock market witnessed a downturn on August 22, with both the Sensex and Nifty breaking a six-day winning streak. This cautious sentiment was partly attributed to anticipation of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium and the impact of new U.S. tariffs on Indian products. The imposition of these tariffs, which could go as high as 50% on certain Indian exports, poses a significant risk to economic growth, with analysis suggesting a potential reduction of India's GDP growth by one percentage point over time. Consequently, Indian companies have experienced the steepest earnings downgrades in Asia.
In other significant business news, the Securities and Exchange Board of India (SEBI) has proposed increasing the minimum amount for a block deal to Rs 25 crore from the current Rs 10 crore. Furthermore, the Indian government's efforts to regulate the online gaming sector are progressing, with the proposed 'Promotion and Regulation of Online Gaming Bill, 2025' reportedly receiving Cabinet approval, which could lead to a ban on all forms of real money games. India's job market also showed signs of improvement in July 2025, with the unemployment rate dipping to 5.2%. Additionally, the country is making strides in infrastructure development and defense manufacturing, with plans to build fifth-generation fighter aircraft with domestic engines.