UPI Peaks, GST Soars: India’s May Momentum Charts a Growth Story

Mumbai | June 2 – Even as global trade tensions simmer and India navigates geopolitical frictions with Pakistan, its domestic economy continues to hum.

The latest high-frequency indicators for May reveal a compelling picture: digital payments are at an all-time high, government revenues are buoyant, and rural demand is stirring back to life. But there’s a catch—manufacturing momentum is starting to ease, subtly reminding policymakers that this growth needs nurturing.

The ₹2-Lakh-Crore Club Is No Longer a One-Off

When GST collections hit ₹2.14 lakh crore in April, it was historic. When it repeated in May—₹2.01 lakh crore to be exact—it became a trend. More significantly, this 16.4% year-on-year jump was the fastest growth in 31 months.

A key reason: formalisation is deepening. Sectors that previously sat on the fringes of the tax net are now inside it. But this also hints at a broader consumption revival, despite inflationary pressure on households.

UPI, FasTag, and the New Infrastructure of Trust

India’s consumption might be cautious in parts, but its digital economy is on steroids. In May, UPI transactions hit an all-time high—₹24.8 lakh crore across nearly 19 billion transactions. That’s a transaction every 0.14 seconds, if you’re counting.

FasTag too clocked its highest monthly value at ₹6,799 crore, showing not just a shift in digital adoption, but an uptick in mobility and logistics.

This trifecta—GST, UPI, FasTag—may well be India’s most consistent monthly confidence metric.

Manufacturing Shows a Quiet Warning Sign

India’s HSBC Manufacturing PMI dipped from 58.2 in April to 57.6 in May. Still firmly in expansion territory, but this was its first deceleration in three months. Why it matters: new order growth and output—both softened.

Yet, exports are an exception. HSBC noted that new export orders grew at the fastest pace in three years. Maruti Suzuki’s export volumes surged 80% YoY. TVS and Bajaj followed with double-digit gains. The weak rupee, combined with firm global demand, is working in India’s favour—at least for now.

Auto: Mixed Domestic Picture, But Rural’s Engine Is Starting

Domestic sales of big automakers weren’t as impressive. Maruti dropped 5.6%, Tata Motors fell 11%. Hyundai posted lower numbers as well. Scheduled maintenance was one reason, but consumer hesitation likely played a role too.

Yet, others thrived:

• Mahindra & Mahindra: 17% rise in overall sales, SUV demand being the key driver.
• Toyota & Kia: Up 22% and 14%, respectively.

Where growth truly stood out was rural India. Tractor sales by Mahindra rose 10% YoY. Bajaj Auto and TVS reported a 9–14% increase in two-wheeler volumes. The early arrival of the southwest monsoon played its part, nudging rural sentiment upwards just before the crucial sowing season.

Policy Support Is Now a Given. The Question Is: What Next?

The Reserve Bank of India has already cut rates twice in 2025, bringing the repo rate down to 6%. Another 25 bps cut is widely expected this week.

On the fiscal side, the ₹2.7 lakh crore dividend from the RBI has changed the arithmetic. Capital expenditure grew 61% YoY in April. The Centre now has both the will and the wallet to keep infrastructure momentum going.

Meanwhile, GDP growth for Q4 FY24 came in at 7.4%, pulling the full-year estimate for FY25 to 6.5%.

The Real Story

India’s May data tells a story of strength—taxes are rising, digital adoption is deepening, and rural India is responding. But the softening of manufacturing growth, muted domestic auto sales, and uneven consumption show that momentum isn’t yet across the board.

The economy isn’t overheating. But it’s not coasting either. For now, India’s growth engine remains on track—so long as policymakers keep their hands steady on both the fiscal and monetary wheel.