While there is uncertainty in the global market due to the Iran-US conflict, the Indian economy continues to perform well. The government’s recent economic report has emphasized strong domestic demand and investment within the country. Be it GDP growth, manufacturing sector or record sales of vehicles, the country is progressing on every front.
How is the economic condition of the country?
India’s GDP growth rate for the financial year 2025-26 was 7.7%, which has increased to 7.8% in the last quarter. This shows that the economy is gaining momentum. Tremendous growth is being seen in both manufacturing and service sectors. PMI in June 2026 was 54.2; It has remained above the 50 mark for 37 consecutive months, indicating continued growth in factory activity. Companies are getting new orders and employment opportunities are also being created.
Meanwhile, the services PMI rose to 59.8 in May from 58.8 in April – the biggest increase since November 2025. The sector remains strong due to new customers and export demand. India’s Index of Industrial Production (IIP) grew by 5.1% in May 2026, the highest growth rate in the last five months. In manufacturing, the automobile sector grew by 14.5%, while the electrical equipment sector saw a massive growth of 20.8%. The supply of electricity and gas also increased by about 10%.
Government’s big step for infrastructure
The report shows that the government is actively working to strengthen the country’s infrastructure. In the first two months (April-May) of the financial year 2026-27, the government has spent ₹2.51 lakh crore on capital expenditure. This is an increase of about ₹29,650 crore compared to last year. The special thing is that Indian Railways spent more than ₹ 84,000 crore during April-May alone, which is about 30% of its annual target. These funds are being used for train safety measures, new signaling and safety systems and laying new tracks.
**Increase in GST collection**
The report shows that the government is also gaining a lot from tax collection. GST collection was ₹1.71 lakh crore in June 2025, which increased by 13.9% to about ₹1.95 lakh crore in June 2026. At the same time, due to good increase in corporate and personal taxes, the net collection of direct taxes increased by 14.64% to ₹5.21 lakh crore till June 17.
**Demand for vehicles increased in rural areas**
Interestingly, vehicle sales in rural areas increased by 7.8% in May. 26.11 lakh vehicles were sold across the country in April 2026, which is the biggest record for the month of ‘April’ in the history of the Indian automotive sector. The demand for SUVs, EVs and two-wheelers remained very high during May and June.