-Jaspreet Kaur
Key highlights | May 2026
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In May 2026, the ongoing conflict in West Asia and elevated global energy prices continued to weigh on India’s external balances. Against this backdrop, domestic economic data showed a mixed but broadly resilient picture. UPI transactions hit a record 23.20 billion in May, while the Composite PMI climbed to a six-month high of 59.3, reflecting strong private sector momentum across both manufacturing and services.
However, pressures also intensified. Total imports outpaced exports, widening the trade deficit sharply to USD 10.51 billion. The labor market softened, with the unemployment rate rising to 5.5 percent and the labor force participation rate dipping to 54.4 percent. Inflation picked up pace, with retail CPI rising to 3.93 percent and wholesale inflation surging to 9.68 percent under the new WPI base year of 2022-23. ETBFSI presents State of the Economy, May 2026, breaking down the key activity indicators, trade flows, and price trends.
GST
India’s total gross GST collection stood at Rs 1.94 lakh crore in May 2026.
This marks a 3.2% YoY rise from Rs 1.88 lakh crore in May 2025, though lower than the record Rs 2.42 lakh crore collected in April 2026.
Net GST collections (after refund) came in at Rs 1.67 lakh crore, reflecting a 3.3% YoY increase.
Among the states, Karnataka, Gujarat, Maharashtra, Kerala and Telangana recorded notable gains after IGST settlements. Import-led GST collections grew 19.1% year-on-year.
| Month | GST Collection (Rs lakh crore) |
| May 2026 | 1.94 |
| April 2026 | 2.42 |
| March 2026 | 2.00 |
| February 2026 | 1.83 |
| January 2026 | 1.93 |
| December 2025 | 1.69 |
(Source: GST Collections Data)
PMI
India’s Manufacturing PMI rose to 55.0 in May, a three-month high, up from 54.7 in April.
The HSBC India Services PMI was revised higher to 59.8 in May 2026 from 58.8 in April, marking the strongest growth since last November.
Mirroring this, the HSBC India Composite PMI rose to a six-month high of 59.3 in May 2026, up from 58.2 in April.
| Month | Manufacturing PMI | Services PMI | Composite PMI |
| May 2026 | 55.0 | 59.8 | 59.3 |
| April 2026 | 54.7 | 58.8 | 58.2 |
| March 2026 | 53.9 | 57.5 | 57.0 |
| February 2026 | 56.9 | 58.1 | 58.9 |
| January 2026 | 55.4 | 58.5 | 59.5 |
| December 2025 | 55.0 | 58.0 | 57.8 |
| November 2025 | 56.6 | 59.8 | 59.7 |
(Source: S&P Global, HSBC)
Inflation
India’s consumer price index inflation rose to 3.93% in May from 3.48% in April 2026.
Wholesale price inflation (under the new base year 2022-23) for the month of May stood at 9.68%, rising from 8.26% in April, driven by fuel & power and manufactured products.
| Month | CPI Inflation (%) | WPI Inflation (%) |
| May 2026 | 3.93 | 9.68 |
| April 2026 | 3.48 | 8.30 |
| March 2026 | 3.40 | 3.88 |
| February 2026 | 3.21 | 2.13 |
| January 2026* | 2.75 | 1.81 |
| December 2025 | 1.33 | 0.83 |
| November 2025 | 0.71 | (-) 0.32 |
*The CPI data from January 2026 is calculated with the new base year of 2024(Source: Ministry of Commerce & Industry)
UPI
India’s Unified Payments Interface processed a record 23.20 billion transactions in May, up from 22.35 billion in April. They accumulated to Rs 29.90 lakh crore in value, up from Rs 29.03 lakh crore the previous month.
On a daily basis, UPI handled an average of around 748 million transactions.
| Month | Volume (In Mn. ) | Value (In ₹ Cr. ) |
| May 2026 | 23,201.93 | 29,90,424.21 |
| April 2026 | 22,346.80 | 29,02,988.05 |
| March 2026 | 22,641.11 | 29,52,542.05 |
| February 2026 | 20,394.18 | 26,84,229.29 |
| January 2026 | 21,703.44 | 28,33,481.22 |
| December 2025 | 21,634.67 | 27,96,712.73 |
(Source: National Payments Corporation of India)
IIP
The IIP growth rate for the month of April 2026 was 4.9 percent, the first release under the revised IIP base year of 2022-23, up from 4.1 percent in March.
The growth rates of the four sectors, Mining & Quarrying, Manufacturing, Electricity & Gas Supply and Water Supply for the month of April 2026 are (-)5.1 percent, 6.2 percent, 4.9 percent and 6.6 percent, respectively.
| Month | Growth Rate (%) |
| April 2026 | 4.9 |
| March 2026 | 4.1 |
| February 2026 | 5.2 |
| January 2026 | 4.8 |
| December 2025 | 7.8 |
| November 2025 | 6.7 |
(Source: Ministry of Statistics and Program Implementation (MOSPI))
Trade Deficit
India’s total exports, of both merchandise and services, for May 2026 are estimated at USD 81.96 Billion, up from USD 80.80 billion in April. Total imports for May 2026 are estimated at USD 92.47 Billion, increasing from USD 88.61 billion, bringing the trade deficit to USD 10.51 Billion.
| Month | Total exports (in USD Billion) |
| May 2026 | 81.96 |
| April 2026 | 80.80 |
| March 2026 | 74.11 |
| February 2026 | 76.13 |
| January 2026 | 80.45 |
| December 2025 | 74.01 |
(Source: Ministry of Commerce & Industry)
Unemployment
India’s unemployment rate rose to 5.5% in May 2026 from 5.2% in April.
Overall LFPR declined marginally to 54.4. % in May compared to 55% in April
Female LFPR was estimated at 32.8%, declining from 33.9% in the previous month.
The overall WPR stood at 51.4%, also declining from 52.2% in the preceding month.
Urban UR is down from 6.4% in May to 6.4% in May,while Rural UR rose to 5.1%.
Female UR rose to 5.6% in May from 5.4% in April.
(All figures are of people aged 15 and above. )
| Month | Rate of Unemployment (%) |
| May 2026 | 5.5 |
| April 2026 | 5.2 |
| March 2026 | 5.1 |
| February 2026 | 4.9 |
| January 2026 | 5.0 |
| December 2025 | 4.8 |
(Source: Ministry of Statistics and Program Implementation (MOSPI))
