India's economy stages May comeback as Moneycontrol Eco Pulse climbs to 54.5

India's economy bounced back in May, with the Moneycontrol Eco Pulse rising to 54.5 — a reading that signals solid expansion and marks a notable improvement from softer prints earlier in the year. The index, which tracks a composite of high-frequency data points spanning manufacturing output, services activity, trade volumes, and consumer spending, uses the 50-mark as the dividing line between contraction and growth.

A reading of 54.5 places India comfortably in expansionary territory and reflects improving momentum across multiple sectors. Manufacturing has been a relative bright spot, supported by strong domestic demand and a pickup in export orders, while the services sector — India's largest economic engine — has continued to demonstrate resilience. The improvement comes even as global headwinds, including trade uncertainty stemming from US tariff policies, have clouded the outlook for many emerging economies.

The May rebound will be welcomed by policymakers at the Finance Ministry and the Reserve Bank of India, both of whom have been monitoring whether early-2025 softness in some indicators would translate into a sustained slowdown. The data suggest it has not. The RBI, which cut interest rates earlier this year to support growth, may point to the Eco Pulse reading as evidence that monetary easing is beginning to feed through to the real economy.

The bigger picture, however, remains one of cautious optimism. While the domestic economy appears to be on a firm footing, risks from global trade disruption, uneven monsoon distribution, and still-subdued private capital expenditure mean that sustaining momentum above the 54-level through the second half of 2025 will require continued policy support and a stable external environment.