The country’s economy continues to gather steam, with demand strengthening steadily across rural and urban regions thanks to GST 2.0 reforms and the festive season, according to a monthly economy review by the Finance Ministry. Consequently, the RBI and the IMF have revised their economic growth projections or India for the current financial year, to 6.8 per cent and 6.6 per cent, respectively.
Here are 10 key takeaways from the finance ministry’s September Economic Review report:
- Domestic inflation remains “well under control” aided by deflation in food categories, with the September CPI reading at 1.5 per cent.
- The RBI’s regulatory and development policy will:
- improve the efficiency of credit allocation
- strengthen the banking sector
- facilitate the economy’s integration into global financial markets
India Festive Season 2025: A bright and fruitful Navratri…
- The convergence of Navratri festivities with the implementation of GST 2.0 rate cuts has boosted customer sentiment and spending. Consequently, passenger vehicle retail sales expanded by 34.8 per cent over the year-ago during the Navratri period, stated the ministry citing data from industry body FADA. That growth was driven by new buyers as well as upgrades to premium variants.
- Rural demand conditions remained resilient, supported by strong festive-season sales. Two- and three-wheeler retail sales recorded strong 35.3 per cent growth during the Navratri period, while tractor sales hit a record high in September, underpinned by favourable monsoon conditions, lower GST rates, and sustained rural purchasing power.
- Economic activity around the globe has continued to be steady despite trade disruptions, reflected in the IMD raising its annual global growth projection to 3.2 per cent this month from 3.0 per cent in July.
India resilient to growing global uncertainty amid trade war
- However, a “fog of uncertainty continues to shroud the global economy”, though the robust economic activity marks “a sharper improvement compared to the projections in the April 2025 WEO. Interpreting this growth as “durable resilience may be incorrect”, it noted.
- Against a global backdrop characterised by economic and trade policy uncertainty, it’s “particularly significant” that the domestic economy continued to strengthen in the July-September period given the Donald Trump administration’s higher tariffs on India in August. The US imposed an additional 25 per cent duty on Indian goods, taking the total tariff to 50 per cent, over India’s steady import of Russian oil. The move came despite India’s clear position that it will make decisions based on its national interest, supply security and cost-effectiveness, and not be dictated by another country.
- The report also noted that the acceleration — despite external headwinds — highlights the domestic economy’s resilience as well as the effectiveness of ongoing structural reforms.
- Various supply-side high-frequency indicators displayed healthy trends, while demand conditions improved on the back of GST reforms and positive festive season sentiments, boosting consumption, it noted.
- Even as trade negotiations with the US are on, the merchandise trade data for September provides early signs of diversification in export destinations.
