Debt Market Update


Debt Market Update

  • Retail inflation (CPI) trended lower to 3.61% in February 2025 (4.31% in January 2025), its lowest in seven months, as food prices eased. Core inflation rose, driven by gold prices.
  • February 2025 saw wholesale inflation hit 2.38% (2.31% in January 2025), driven by rising manufacturing costs. With crude below USD80, inflation may stabilize in the near term.
  • Industrial output (IIP) rose 5% in January 2025, surpassing the 3.5% growth in December 2024. Manufacturing expanded 5.5%, mining 4.4%, but electricity slowed to 2.4%. Capital goods and consumer durables growth moderated, while non-durables contracted slightly. Robust manufacturing and investment drive resilience must be seen in the backdrop of slowing electricity and capital goods output.
  • India's eight core industries recorded a 2.9% year-on-year growth in February 2025 (revised 5.1% in January 2025), marking the lowest expansion in five months due to sluggish performance in crude oil and natural gas. The last instance of growth falling below this level was in September 2024, when it stood at 2.4%. Among the sectors that witnessed expansion were cement (10.5%), fertilisers (10.2%), steel (5.6%), electricity (2.8%), coal (1.7%), and refinery products (0.8%). In contrast, crude oil and natural gas output declined by 5.2% and 6%, respectively. The cumulative growth for the core sector from April to February 2024-25 was provisionally recorded at 4.4%.
  • Gross GST collections climbed by 10% to Rs 1.96 lakh crore in March 2025, up from Rs 1.84 lakh crore in February 2025. This marks the 13th consecutive month where collections have exceeded ₹1.7 lakh crore. On a quarterly basis, revenue saw a 10.4% year-over-year increase, reaching ₹5.8 lakh crore.
  • India's trade deficit dropped to UD14.05bn in February 2025 (USD22.99bn in January 2025), aided by declining gold, silver, and crude imports. Exports fell 10.84% YoY, while imports shrank 16.3%. The deficit was well below the FY2025 average, signaling a potential current account surplus.

Source: RBI, Bloomberg, CCIL, MOSPI
*BE - Budget Estimates

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