Current Affairs - Economy

In July 2025, India recorded a significant drop in retail inflation, which fell to 1.55%. This marked the lowest level in eight years, with the last comparable figure seen in June 2017. The fall from 2.1% in June to 1.55% in July reflects easing price pressures across both rural and urban areas. Rural inflation stood at 1.18%, while urban inflation was 2.05%. Additionally, food prices experienced deflation, with the all-India Consumer Food Price Index falling to -1.76%, its lowest since January 2019. Such a sharp decline suggests improving supply-side conditions and stabilization in food prices.

Goldman Sachs has reduced its projection for India’s real GDP growth in 2026 to 6.4%, marking a 0.2 percentage point decline from the previous year’s estimate. This downward revision is attributed to escalating US–India trade tensions, specifically the 25% tariff imposed by the United States, as well as broader policy uncertainty affecting investor confidence and business planning. While the firm acknowledges that some tariffs might be renegotiated over time, the unpredictability surrounding trade policies remains a significant risk factor. This cautious stance reflects concerns over sustaining growth momentum amid geopolitical and macroeconomic challenges.

India’s electronics exports surged by 47% year-on-year in Q1 FY26, reaching $12.4 billion compared to $8.43 billion in the same quarter of the previous year. This remarkable growth was primarily driven by mobile phone exports, which alone rose 55% to $7.6 billion, supported by production-linked incentive (PLI) schemes and global manufacturers increasingly using India as an export hub. Non-mobile electronics also showed strong performance with a 37% increase, driven by solar modules, networking equipment, and electronic components. This robust momentum underscores India’s growing position as a global electronics manufacturing powerhouse with diversified export strengths.

Life Insurance Corporation of India (LIC) recorded a 5% year-on-year increase in net profit for Q1 FY26, reaching ₹10,987 crore compared to ₹10,461 crore in the same quarter last year. This growth came despite a slowdown in new policy sales due to regulatory changes, with strong renewal premiums supporting income stability. LIC also reported a 5% rise in net premium income and a significant improvement in asset quality, with gross NPAs falling by 21% and net NPAs by 36%. The solvency ratio rose to 2.17%, underscoring LIC’s enhanced financial strength and its dominant market position in both retail and group segments.

The Housing Price Index (HPI) for 13 major Indian cities reached 132 in March 2025, reflecting an 8-point increase from 124 in March 2024. This rise indicates a phase of stabilisation in India’s residential real estate market following several quarters of rapid price appreciation. While prices showed no change from February 2025, the annual growth suggests a healthy consolidation period driven by cautious buyer sentiment and supply-side adjustments. The trend is seen as beneficial for long-term market sustainability, supported by factors like recent interest rate cuts, growing incomes, and strong underlying demand fundamentals in urban centres.