Festive Season Data Lifts India's Economic Outlook Despite Tariff Pressures: Report
New Delhi, November 13, 2025 – India's economic outlook is showing promising signs, buoyed by strong consumer demand during the recent festive season, despite persistent global headwinds such as tariff pressures. According to a new report, the surge in spending reflects growing consumer confidence and is expected to drive further economic expansion in the coming months.
The festive season, which includes major celebrations like Navratri and Diwali, traditionally sees a spike in consumer spending. This year, the increase has been particularly pronounced, especially in demand for luxury items, indicating a robust consumer outlook. This willingness to spend is a critical signal, demonstrating confidence in future earning capacity and job security.
Several key indicators support this positive assessment. Goods and Services Tax (GST) revenues have remained steady, and inflation trends are favorable. Private consumption rose 7% supported by tax cuts that boosted disposable incomes. Retail sales grew 6.8% through July, while fast-moving consumer goods volumes surged 13.9% in the second quarter of 2025. This strong domestic demand is expected to continue, with businesses responding to meet elevated demand.
The e-commerce sector has also played a significant role, with online retailers gearing up for strong festive sales. E-commerce sales are expected to have increased significantly, driven by value-conscious buyers from Tier 2 and Tier 3 cities. This growth has created new opportunities for sellers, service providers, and the workforce, promoting inclusive growth.
Government initiatives are further bolstering the economy. Government spending rebounded, growing 7.5%, aided by early disbursement of funds and higher allocations. Investment in infrastructure, which has topped ₹10 lakh crore in recent budget allocations, is expected to provide multi-year support to rural and semi-urban demand. These investments are acting as a multiplier, creating a significant tailwind for the economy.
However, challenges remain. Liquidity in the banking system has tightened amidst the holiday rush. Weaker external demand and tariff pressures continue to pose risks to growth forecasts. To mitigate these risks, the report suggests that finalizing trade agreements with key partners, such as the United States and the European Union, would ease trade-related uncertainties and support continued growth.
Despite these challenges, the overall outlook for the Indian economy remains positive. Multiple agencies project a GDP growth of above 6.5% for fiscal year 2026. India's GDP grew 7.8% year over year in the April to June quarter of fiscal 2025 and 2026. India Ratings & Research (Ind-Ra) has projected India's GDP to grow at 7.2 per cent in the second quarter of the current fiscal, with private consumption being the leading growth driver.
The resilience of the domestic engine is what insulates the Indian market outlook from global headwinds. The high level of domestic confidence and spending validates the decision to increase investment in sectors that cater to the mass market. This broad-based consumption is crucial for maintaining the strong India GDP growth rate.
