Goldman Sachs: India’s consumption gains, investment outlook mixed

Real agricultural wages rose 4.5% in May, the highest in eight years, aided by a strong winter harvest, controlled food inflation, and government welfare spending

India’s monthly consumption activity has shown signs of strength in recent weeks, even as investment signals remain uneven, according to a Goldman Sachs report tracking high-frequency economic data.

The report highlighted that urban consumption picked up in July, with higher passenger vehicle sales and petrol demand. Gross GST collections also improved sequentially from the July dip, though year-on-year (YoY) growth stood at 7.5 per cent. Air passenger traffic witnessed a sharp rebound in the first half of August, driven partly by holiday travel around Independence Day.

Rural revival

On the rural front, activity indicators showed a broader improvement. Tractor registrations and agricultural exports posted robust year-on-year gains of around 14 per cent and 13 per cent, respectively. Rural incomes also received a boost, with real agricultural wage growth touching 4.5 per cent in May, the highest in eight years. Goldman Sachs noted that a strong winter crop harvest, contained food inflation, and increased welfare spending could support rural consumption in the coming months.

However, the report cautioned about weather-related pressures, with temperatures rising in several regions and driving a sharper-than-expected spike in vegetable prices in July.

Mixed investments

In contrast to the consumption uptrend, investment activity painted a mixed picture. Coal production dropped sharply in July due to monsoon disruptions, while automobile and steel output rose. On a year-on-year basis, steel production remained strong at 11 per cent. Transportation activity showed uneven trends, with diesel demand rising but port cargo movement staying largely unchanged. Goldman Sachs’ proprietary investment index signaled a mild slowdown, tracking 6.7 per cent growth in the third quarter of CY25 compared with 7.7 per cent in the previous quarter of the same year.

Overall, the findings from Goldman Sachs underline that while household and rural spending have continued to support growth momentum, investment activity remains under pressure from seasonal and sector-specific challenges.

Published on August 19, 2025