India encounters divergent economic trends amid global uncertainties as high-frequency indicators show softening industrial output and 4W vehicle demand alongside sustained momentum in capex, services trade, and air-road travel. Central government accelerates capex spending in April-May while industrial investment builds, as per CMIE, in Q1FY26. Monetary policy transmission strengthens following repo cuts as inflation hits six-year lows. Rupee appreciates on dollar weakness last month though trade-weighted depreciation bias persists. Above-normal monsoon supports agriculture despite spatial variance. While overall goods trade slowed, exporters frontload key commodities ahead of reciprocal tariff deadline.

Click the link to access the Annexure to NIIF’s Monthly Economic Report for July 2025.