Current Affairs - Economy

India’s core sector growth slowed significantly to 0.7% in May 2025, representing the weakest expansion in the last nine months. This decline was driven by contractions in critical sectors such as crude oil, natural gas, fertilisers, and electricity. The Index of Eight Core Industries (ICI), which tracks these sectors and contributes about 40% to the broader Index of Industrial Production (IIP), serves as a vital gauge of economic momentum. The sharp deceleration follows a prior month of sluggish performance, highlighting underlying stress in industrial output. This downtrend could impact overall GDP growth and signal a need for policy attention.

According to the Reserve Bank of India, India’s House Price Index (HPI) increased by 3.1% year-on-year in the fourth quarter (January–March) of FY2024–25. This moderate growth highlights a steady recovery in the country’s urban housing markets, with continued resilience in demand. The data, gathered from property registration authorities across ten major cities, is a reliable indicator of real estate price trends. While Kolkata led with an 8.8% rise and Kochi saw a 2.3% decline, the national average points to balanced and sustained momentum. The 3.1% annual increase is slightly lower than the 4.1% growth seen during the same period the previous year.

ICRA has forecasted India’s GDP growth for FY2025–26 at 6.2%, indicating a slight moderation from the 6.5% growth recorded in the previous fiscal year. The dip is attributed primarily to weaker global trade conditions and a slowdown in merchandise exports. Despite these external challenges, strong rural demand, higher capital expenditure by the government, and fiscal support measures are expected to maintain economic momentum. The projection plays a crucial role in shaping fiscal policy, investment strategies, and economic planning for the year, as it reflects the balancing act between global headwinds and domestic resilience.

The unemployment rate in India rose from 5.1% in April 2025 to 5.6% in May 2025, according to the Periodic Labour Force Survey (PLFS). This increase indicates a concerning trend in joblessness, particularly impacting youth and women across both urban and rural areas. The PLFS data is critical as it provides a comprehensive look at labour trends across demographics and regions. The rise also comes alongside a decline in the Labour Force Participation Rate to 54.8%, suggesting fewer people are either working or actively seeking jobs.

In May 2025, India’s wholesale price inflation (WPI) dropped to 0.39%, marking a significant decline from 0.85% in April. This easing was primarily attributed to substantial deflation in food prices, especially vegetables, which saw a drop of over 21%. The slowdown was also influenced by reduced prices of fuel and manufactured goods. This figure represents the lowest wholesale inflation rate in over a year and reflects a broader disinflationary trend, which is also evident in retail inflation numbers. This data is important for shaping economic and fiscal strategies, especially in managing input costs and consumer pricing trends.