Indian Economy Report: While there is an atmosphere of uncertainty in the markets around the world after the Iran-US war, the Indian economy is continuously shining. In the latest economic report released by the government, it has been said that the situation of domestic demand and investment in the country is strong. Be it GDP growth, manufacturing sector or record sales of vehicles, the country is progressing on every front.

How is the economic health of the country?

India’s GDP growth in the financial year 2025-26 has been 7.7%. In the last quarter of the year it further jumped to 7.8%. That means the pace of the country’s economy is increasing. Tremendous growth is being seen in both the manufacturing and services sectors of the country. PMI stood at 54.2 in June 2026. It is above the 50 mark for the 37th consecutive month, which means that work in factories is continuously increasing. Companies are getting new orders and employment opportunities are being created.

At the same time, the Services PMI Index increased from 58.8 in April to 59.8 in May. The great thing is that this is the biggest increase after November 2025. This sector is strong due to new customers and export demand.

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India’s Index of Industrial Production or IIP grew at a pace of 5.1% in May 2026, which is the highest in the last 5 months. In manufacturing, the automobile sector has jumped by 14.5% and the electrical equipment sector has jumped by 20.8%. An increase of about 10% has also been recorded in electricity and gas supply.

Government’s big bet on infrastructure

It has been told in the report that the government is strengthening the basic infrastructure of the country. In the first two months (April-May) of the financial year 2026-27 alone, the government has made a capital expenditure of Rs 2.51 lakh crore. This is approximately Rs 29 thousand 650 crore more than last year.

Let us tell you that out of this, Indian Railways alone has spent more than Rs. 84 thousand crores in April-May, which is about 30 percent of its target for the entire year. This money is being spent on the safety of trains, new signal systems, protection systems and laying of new tracks.

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Jump in GST collection

This report shows that the government is successful even in the matter of tax collection. GST collection increased by 13.9% to about Rs 1.95 lakh crore in June 2026, which was Rs 1.71 lakh crore in June 2025. Talking about direct tax, till June 17, the net direct tax collection has increased by 14.64% to Rs 5.21 lakh crore. There is good growth in both corporate and personal taxes.

Demand for vehicles increased in villages

Interestingly, vehicle sales in rural areas have increased by 7.8% in the month of May. If we talk about the entire country, then 26.11 lakh vehicles were sold in April 2026, which is the biggest ‘April record’ in the auto history of India. There was bumper demand for SUVs, EVs and two-wheelers in May and June also.

Retro GST: These days there is a lot of discussion in the country about retro GST. Especially online gaming companies are openly raising questions against the government regarding this. The matter is related to tax worth thousands of crores of rupees and it can affect the entire online gaming sector. The government is demanding the outstanding GST of last several years from some gaming companies. Companies say that it is not right to suddenly impose such a huge tax on the basis of old rules. Due to this the term retro GST has come into discussion.

After all, what is retro GST?

Retro GST means applying tax later on old transactions or collecting tax on old transactions in a new way. That means, if a company had worked as per any rule in 2018 or 2019, but later the government says that more tax should have been paid at that time, then it may have to pay the outstanding tax of the old years.

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Why did the case come against online gaming companies?

The government says that online gaming platforms should have paid GST not just on their commission or fees, but on the entire contest account. That means, if there is a contest of Rs 100 on any gaming app, then tax will be imposed not only on the company’s earnings but on the entire Rs 100. The controversy started from here. Till now many companies were paying 18% GST only on platform fees. But the government claims that they should have paid 28% GST on the entire account. For this reason, tax notices worth thousands of crores of rupees have been sent to many companies.

How many years old tax is being demanded?

According to reports, the government is demanding old taxes of up to 10 years from some companies. This means that old transactions are being investigated, interest and penalty are also being added, the total amount is reaching thousands of crores. Regarding this, companies are saying that this has become a case of retro taxation.

What is the problem with the companies?

Online gaming companies say that earlier the rules were not completely clear. The industry was paying GST in a different way for a long time. It is wrong to suddenly demand such a huge tax from old years. Companies also say that if such heavy tax has to be paid, many startups may be closed.

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What is the government saying?

The government’s stand is clear that online real money gaming will be considered like betting and gambling, hence 28% GST will be applicable on it. GST Council has already taken a decision on this. The government says that tax evasion will not be allowed and all companies will have to follow the rules.

What effect will this have on the common people?

If the heavy tax burden on gaming companies increases, it may directly impact the users as well. There is a possibility that entry fees may increase, winnings may reduce and many offers and cashbacks may be discontinued. Some small companies may also go out of the market. Well, now this matter has reached the court. Many online gaming companies have reached court regarding this matter. He says that the government cannot collect heavy taxes by interpreting the old rules differently. Now everyone’s eyes are on the next decision of the court and GST Council.

Petrol-Diesel GST: Chamber of Trade and Industry (CTI) Chairman Brijesh Goyal has raised the demand to bring petrol and diesel under the ambit of GST amid rising prices. Today he has also written a letter to Prime Minister Narendra Modi on this subject.

He has appealed to the Central Government to immediately include petrol and diesel under the ambit of GST. For a long time, businessmen, factory owners and common people have been demanding this, so that they can get relief from this huge inflation.

Heavy taxes on petrol and diesel

Brijesh Goyal, Chairman of CTI, the top organization of traders and entrepreneurs in Delhi and the country, has said that if we talk about Delhi, according to the data till May 22, the actual price of petrol was Rs 66.29, on which excise duty is Rs 11.90 and VAT is Rs 16.03, while the dealer’s margin was Rs 4.42. The actual price of diesel was Rs 67.36, excise duty was Rs 7.80 and VAT was Rs 13.39, while the dealer margin was Rs 3.03.

He told that today around 42% tax is levied on the actual price of petrol including excise duty and VAT while diesel is levied around 32% tax. According to CTI, petrol is the most expensive in Telangana in the country because the highest VAT on petrol in Telangana is 35.2%, whereas in Andaman and Nicobar, petrol is the cheapest there due to only 1% VAT on diesel.

Petrol and diesel come under the purview of GST

Brijesh Goyal has said in a letter to PM Modi that when GST was implemented in 2017, there was talk of One Nation One Tax and it was said that there will be uniform tax and uniform rate on everything in the country, but all the states are arbitrarily charging VAT on petrol and diesel as per their own. Due to this, the rates of petrol and diesel are different in every state.

Due to this, the concept of One Nation One Tax is also being attacked. In such a situation, excise duty and VAT on petrol and diesel should be abolished and brought under the purview of GST. This will not only make the rates of petrol and diesel uniform across the country but will also reduce the rates of petrol and diesel.

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On May 10, 2026, Prime Minister Narendra Modi had made an emotional appeal to the citizens of the country and said that we all should together save the country’s foreign exchange. For this we will have to reduce expenditure on things coming from outside. This appeal came at a time when India’s foreign exchange reserves had come down to $ 690.69 billion, the rupee had touched an all-time low of 95.63 against the dollar and the price of crude oil had gone above $ 105 per barrel. In such a situation, the question arises that if PM Modi’s appeal is accepted, how much damage can be caused to the country’s economy?

Three big economic reasons behind PM Modi’s appeal

1. Rising price of crude oil: India buys about 89% of its crude oil requirement from other countries. In the year 2025-26, India imported crude oil worth about $123 billion. This is the largest part of our total import bill. In the last one year, the price of oil increased from $ 70 per barrel to above $ 113. When oil is expensive, more dollars go out of the country’s pockets.
2. Heavy import of gold: Every year 700 to 800 tonnes of gold is consumed in India, whereas in our country only 1 to 2 tonnes of gold is produced. We have to import the remaining gold from outside. About 72 billion dollars were spent on this in the year 2025-26. Buying gold means going out of dollars.
3. Rupee is weakening and CAD is under pressure: On May 12, 2026, the rupee reached its lowest level of 95.63 against the dollar. When the rupee weakens, buying goods from outside becomes more expensive. This creates a danger of increasing inflation.

Understand in simple words: CAD means Current Account Deficit. When a country spends more than it earns from other countries, it is called CAD. This directly puts pressure on our foreign exchange reserves. A major reason for these three problems is the ongoing tension in West Asia, due to which the oil supply has been affected and the oil market of the entire world is unstable.

If the appeal is accepted, how big a loss is possible to the economy?

If the entire country starts implementing these things together, then foreign exchange will be saved, but the demand in many important parts of the economy will suddenly decrease. This can have a direct impact on jobs, business and the country’s growth rate (GDP growth):

1. Big impact on gold and jewelery industry

This is the area that will suffer the first and biggest blow. India is the second largest gold purchasing country in the world and imports more than 90% of its gold requirement. In the last financial year (FY26), India imported gold worth about $72 billion, which is about 10% of the total import bill.

loss estimate

• Threat to jobs: According to Rajesh Rokade, Chairman of All India Gems and Jewelery Domestic Council (GJC), this appeal may threaten the livelihood of more than 1 crore (10 million) people who are directly or indirectly associated with the jewelery industry.
• Impact on MSMEs and artisans: According to the Gem and Jewelery Export Promotion Council (GJEPC), about 3 lakh small businesses (MSMEs), artisans and traditional jewelery hubs (Mumbai, Surat, Jaipur, Kolkata, Hyderabad) will be affected by the prolonged decline in gold demand.
• stock market crash: Immediately after the appeal, shares of big jewelery companies fell heavily. Titan Company fell by 5.34%, Kalyan Jewelers by 7.43%, Senco Gold by 8.98% and PC Jewelers by 3.89%.
• Effect on gold price: Experts say that India is the world’s largest gold consumer, so if Indians do not buy, global gold prices may fall.

2. Impact on tourism, hospitality and aviation industries

The Prime Minister has appealed to ban foreign trips and promote work from home. This will have a direct impact on the travel, hotel and airline industries.

loss estimate

• Impact on foreign exchange expenditure: In the financial year 2025, about 58% of the total amount sent under the Liberalized Remittance Scheme (LRS) was spent on international travel.
• Pressure on domestic sectors: If people start working from home on a large scale, it will put short-term pressure on sectors like hospitality, aviation, logistics and commercial real estate which are dependent on the physical movement of people.
• Foreign Tourism Disadvantages: The appeal of holding weddings and programs within the country will save Indian expenditure on foreign tourist destinations, but the business of tour operators and airlines associated with it will be affected.

3. Eye on private consumption and economic growth

This is a matter of biggest concern. The contribution of private consumption in India’s economy is about 60%. This means that the speed of our GDP depends to a great extent on how much we all are spending together.

loss estimate

• Estimate of huge decline in GDP growth: On May 12, 2026, Moody’s Ratings reduced India’s 2026 GDP growth forecast by 0.8% to 6%. Their reasons were weak private consumption, slow capital formation and sluggish industrial activity. The estimate for 2027 was also reduced to 6%.
• CRISIL estimates: CRISIL has estimated GDP growth for the financial year 2026-27 at 6.6%.
• Worst case: According to JM Financial, if the oil supply disruption continues for a few more weeks, then in the worst case scenario GDP growth could fall to 6-6.5%.
• Economist’s warning: According to Anil Kumar Bhansali, head of Finrex Treasury Advisors, the short-term effect of the PM’s advice will be in the form of a slowdown in economic growth.

4. What will be the government finances and fiscal deficit?

When people reduce consumption, the taxes received by the government (like GST) also reduce. Also, the government’s budget may deteriorate due to high oil prices and the burden of subsidies.

loss estimate

• Nomura reports: Japanese financial institution Nomura estimates that India’s fiscal deficit may increase to 4.6% of GDP in the financial year 2026-27, which is more than the budget target of 4.3%.
• Losses of oil companies: Government oil companies (OMCs) are incurring a loss of Rs 30,000 crore every month due to keeping prices stable. If prices have to be increased even after reducing consumption, its political and economic damage will be different.
• Moody’s warning: Moody’s said higher fuel and fertilizer costs will put pressure on government finances, which could lead to cuts in planned capital spending (government investment).

5. Stock market and investor confidence

Immediately after the Prime Minister’s appeal, the stock market reacted very negatively, which shows that fear of economic slowdown has settled in the minds of investors.

loss estimate

• Disadvantages of Market Capitalization: On May 12, 2026, on the first trading day after the appeal, the Sensex fell 1,312.91 points (1.70%) and the Nifty fell 360.30 points (1.49%). In this decline, market capitalization of more than Rs 6 lakh crore of BSE listed companies was wiped out in just one day.
• Investors’ concerns: Nomura said in his note that the PM’s appeal is an indication that India’s fiscal situation is reaching a ‘tipping point’.
• Record fall in rupee: On the same day, the rupee fell by 82 paise and closed at a record low of 95.31 against the dollar.

6. What will be the impact on edible oil and agriculture sector?

PM Modi has also appealed to reduce the consumption of edible oil and adopt natural farming instead of chemical fertilizers. Although it has health and environmental benefits, there are also some challenges economically.

loss estimate

• Risks to Agricultural Productivity: Abruptly moving away from chemical fertilizers can have a short-term impact on crop production, leading to the risk of increasing food inflation.
• Additional pressure on imports: India’s fertilizer imports had already increased by 61% to $16 billion in FY26, which is a matter of serious concern.

Estimate of slowdown in economic activities

Professor Lekha Chakraborty of NITI Aayog and NIPFP says this is a ‘sensible economic stability strategy’, which encourages citizens to reduce import-heavy consumption. However, she also believes that fuel consumption is not completely dependent on the will of the people, because industry, logistics and transportation run on it. If there is a sharp decline in fuel consumption, it could mean a slowdown in economic activity.

Not increasing prices is also a problem

Rahul Ahluwalia, founding director of the Foundation for Economic Development, said that the PM’s address actually reflects the distortion of the delayed recovery in prices. If prices were allowed to rise in line with the market over time, people’s consumption habits would automatically change.

Is this a sign of a 1991-like crisis?

ORF’s economic expert Vivek Mishra believes that the situation now is not as bad as 1991. At that time, India’s foreign exchange reserves were equal to only three weeks of imports. But organizations like Nomura have warned that the government may have to ask ordinary households to share this economic burden. Its immediate effect can be seen in the form of increase in the prices of petrol and diesel.

Reduction in imports, a different perspective

Yes Bank Chief Economist Indranil Pan cautioned that the debate should not be limited to CAD only. The net inflow of foreign investment (FDI) is very weak. The policy response should focus on increasing capital flows rather than curbing consumption.

MOSPI Service Index: The Ministry of Statistics and Program Implementation (MoSPI) on Monday is set to launch a new monthly indicator called ‘Index of Service Production’ (ISP) to measure the output of the formal services sector every month. This index will mainly use Goods and Services Tax (GST) data, so that the activities of the service sector can be closely monitored.

Releasing an ‘approach paper’ on this, the Statistics Ministry on Monday sought comments till May 5 on its plan to create a Service Production Index (ISP) for the formal sector of the economy considering 2024-25 as the base year. This paper has come just before the revision of Index of Industrial Production (IIP) to be held next month. This is a part of the major changes being made by MoSPI in government data.

What is its purpose?

At present, there is ‘Index of Industrial Production’ (IIP) for the manufacturing sector, but there is no such monthly indicator for the service sector. ISP will remove this deficiency. This is also important because the contribution of service sector in India’s GDP is more than 50 percent. This will include more than 40 sub-sectors like wholesale and retail trade, transportation, warehousing, telecommunications, banking, insurance, real estate, hotels and restaurants.

What will be the source of the data?

As already mentioned, GST network will be its primary source, which will provide information about production and supply data of various sectors. Additionally, administrative data from ministries and other organizations for GST-exempt sectors such as education and health will be used.

What will be the benefit?

Since half of the economy comes from the service sector, this data will help the government in taking right decisions at the right time and making the budget. If ever people suddenly start spending more on hotels or flights, then this data will clearly show that this sector is still growing.

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SIP Charges: If you also invest in SIP i.e. Systematic Investment Plan, then you must be aware of the charges related to it. Because if you do not have correct information about it, you may suffer a lot of loss. Many times people focus only on investment, but small charges can reduce their wealth. One such charge is the penalty for failure of SIP installment.

What happens if installment fails?

If there is not sufficient balance in your bank account and the SIP installment is not deducted, then the bank can impose a penalty of Rs 250 to Rs 750 per transaction. Not only this, 18 percent GST is also added to it. Due to this you may have to suffer huge losses every month. Especially when many of your SIPs are running simultaneously.

How can there be a loss of up to ₹2950?

According to mutual fund experts, if several of your SIP installments fail in a single day, the penalty increases rapidly. For example, if your every transaction is charged around Rs 500 and 5 of your SIPs fail, then a fine of Rs 2500 will be imposed and when GST is added to it, the total loss can reach around Rs 2950.

Why is this a serious matter?

Many investors ignore the fact that this charge is levied on every transaction and not every day. Therefore, if you have set up multiple SIPs on the same date, the loss can increase significantly.

How does the system work?

SIP in India usually runs through the NACH system operated by the National Payments Corporation of India. This system allows asset management companies to automatically debit money from your bank account on a scheduled date.

LPG Cylinder Booking Tax: Due to increasing tension in the Middle East, gas supply is being seriously affected. Its direct impact is visible on the prices of LPG in India. Recently, the government had increased the prices of domestic and commercial gas cylinders, due to which people are facing a lot of problems, but in the meantime, the Chamber of Trade Industry (CTI) has written a letter to Prime Minister Narendra Modi demanding to make LPG and PNG tax-free.

CTI says that if the tax on these is removed, then the prices of gas will fall, due to which the common people can get a lot of relief.

At present, 5 percent GST is levied on domestic LPG cylinders, while up to 18 percent GST is levied on commercial cylinders. If we talk about PNG, it is not yet under the purview of GST and state governments levy VAT on it at different rates, which ranges from about 3 percent to 14.5 percent. For example, 5 percent VAT is applicable on PNG in Delhi.

LPG will be cheaper after GST is removed

Domestic LPG Cylinder: Currently its price in Delhi is Rs 913. After removal of GST, it will remain around Rs 870, i.e. it will be cheaper by around Rs 43.

Commercial Cylinder: Its price in Delhi is Rs 2078. After removal of GST, it will become approximately Rs 1760, i.e. there will be a saving of around Rs 318.

People will get relief by removing GST

CTI Chairman Brijesh Goyal has appealed to the government that tax relief should be given in view of the current circumstances. He believes that this will not only benefit the common consumers but will also provide relief to small businesses. Other officials of the organization say that due to the increasing crisis in West Asia, there has been instability in the global oil and gas market, due to which the demand in India has also increased.

Especially in Delhi, a rapid increase in the number of PNG connections has been seen. While in February 2026, about 686 new connections were being added every day, by March this figure increased to about 2000 every day. Overall, if the government gives tax exemption on LPG and PNG, it will provide great relief to the general public.

LPG Cylinder Crisis Iran War: The impact of the ongoing war and increasing tension in Western Asia has now reached the kitchens of the common people of India. The shortage of LPG is increasing across the country and especially in Delhi, while the demand for PNG is increasing rapidly. However, the taxes imposed on both these fuels are putting additional burden on the pockets of the general public and traders.

Brijesh Goyal, Chairman of the Chamber of Trade and Industry, the top organization of businessmen of Delhi and the country, has written a letter to Prime Minister Narendra Modi regarding this serious issue. In the letter, he has raised the demand to make LPG and PNG completely tax free, so that the common people can get relief.

Different tax burden on LPG

According to the organization, currently 5 percent GST is levied on residential LPG in India, while this tax on commercial cylinders reaches 18 percent. In such a situation, it is having a direct impact on business activities.

PNG is also not untouched by tax

Although PNG does not currently come under the purview of GST, VAT ranging from 3 percent to 14.5 percent is levied on it in different states. 5 percent VAT is applicable on PNG in Delhi, which increases its cost.

Brijesh Goyal says that the Central Government should reduce GST on LPG to zero and VAT on PNG should also be completely abolished. He believes that this will provide great relief to both consumers and traders across the country.

Domestic impact of global crisis

According to CTI Senior Vice President Deepak Garg and Vice President Rahul Gandhi, the increasing conflict in West Asia has created a global oil and gas crisis. Its effect is clearly visible in India, where there is a shortage of LPG and a rise in the demand for PNG.

Sharp jump in PNG connections in Delhi

General Secretaries Gurmeet Arora and Ramesh Ahuja said that the number of people taking PNG connections in Delhi has increased rapidly. While in February 2026, an average of 686 connections were being given daily, in March this figure has reached around 2000.

Despite this, there are about 56 lakh domestic LPG connections in Delhi. In such a situation, both the availability and price of gas remain a matter of great concern for the common people.

GST Collection: India’s gross Goods and Services Tax (GST) collection increased to more than Rs 1.83 lakh crore in February 2026, which is 8.1 percent more than the previous month. With this, the total gross GST revenue till February 28 for the financial year 2026 reached Rs 20.27 lakh crore, which shows an increase of 8.3 percent as compared to last year.

GST refund in the month of February was Rs 22595 crore, which is 10.2 percent more than last year. With this, the net GST revenue in February became Rs 1.61 lakh crore. Where the domestic refund decreased by 5.3 percent to Rs 9939 crore. At the same time, import related refunds increased by 26.5 percent to Rs 12656 crore. The increase in GST collection is a proof of the country’s strengthening economy.

How much did import revenue increase?

Last month, gross domestic revenue increased by 5.3 percent to Rs 1.36 lakh crore, while gross import revenue increased by 17.2 percent to Rs 47837 crore. However, the net cess revenue declined significantly to Rs 5063 crore, whereas in February last year it was Rs 13481 crore. After state-wise settlement, a mixed picture of GST revenue was seen. Industrialized states reported good growth, while some smaller states saw a decline. Maharashtra became the largest tax contributing state with Rs 10286 crore in pre-settlement collection, followed by Karnataka and Gujarat.

Which states had higher GST collection?

Maharashtra, Gujarat, Tamil Nadu and Karnataka recorded the highest GST collection last month. Apart from this, Haryana, Uttar Pradesh, Delhi and West Bengal remained ahead in higher GST collection.

These states lagged behind in GST collection

States like Lakshadweep, Andaman and Nicobar Islands, Ladakh, Mizoram, Nagaland and Manipur lagged behind in terms of GST collection.

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Higher Tax On Cigarettes: If you smoke cigarettes, the warning written on the packet is not just limited to health, but now it is directly affecting your pocket as well. Cigarettes are also among the products that have been given the biggest blow in the budget presented by the government on February 1. After increasing the tax on tobacco products, there has been a sharp increase in the prices of cigarettes.

cigarette will burn your pocket

After the new rates, cigarettes of most brands which were earlier available for Rs 10, will now be sold for at least Rs 20 to 25. At the same time, the prices of premium cigarettes have increased even more, due to which the habit of smoking has become more expensive than before. Such a huge tax increase on cigarettes has been made after almost seven years.

The government argues that it was necessary to bring the tax imposed on tobacco in line with global health standards. Along with this, the government also aims to discourage people from smoking, so that its side effects can be reduced. The budget has introduced a new tax system for cigarettes and tobacco products, which will replace the GST compensation system, which was implemented in July 2017.

Why such a huge tax on cigarettes??

In fact, Parliament had cleared the way for this new tax system in December, when it approved imposing higher taxes on cigarettes and other tobacco products. Now it has been implemented through the budget, whose direct impact is visible on the prices and this step reflects the government’s strategy related to both health and revenue.

Whereas, the price of 76 mm cigarette is expected to be Rs 50 to 55 per pack. But it depends on that brand. Now the final price will depend on the revised price of cigarettes by the companies.

Also read: From taxpayers to investors and consumers… who will benefit and who will be shocked by Budget 2026?