India's economic momentum accelerated in October, fueled by resurgent festive spending, robust urban and rural consumption, and the positive impact of recent Goods and Services Tax (GST) rate reductions. This is according to the Reserve Bank of India (RBI) in its November Bulletin. The central bank's report, titled "State of the Economy," highlights the economy's resilience despite persistent external headwinds.
The RBI noted that demand conditions exhibited signs of improvement, with a revival of urban demand and continued strength in rural demand. High-frequency indicators for October suggest a robust expansion in both manufacturing and services activities, supported by festive season demand and the ongoing positive impact of the GST reforms. GST collections improved over the previous month, indicating a strong pickup in consumer demand.
The report, authored by RBI staff with guidance from Deputy Governor Poonam Gupta, clarifies that the views expressed are those of the authors and do not represent the official views of the RBI. The central bank reiterated that the views expressed in the article are those of the authors and not the official position of the RBI.
The Indian economy "showed signs of a further pick-up in momentum" in October, supported by strong festive-season demand and the ongoing positive impact of GST reforms. High-frequency indicators pointed to robust expansion across manufacturing and services.
The RBI bulletin also pointed out that India is becoming increasingly resilient to external shocks. This resilience is attributed to strong services exports, steady remittance flows, and a reduced negative impact of fluctuating oil prices on the current account. Key external vulnerability indicators improved as of June-end compared with March-end 2025, and the current account deficit remained modest in Q1 FY26.
The bulletin highlights improvements in inflation rates and financial conditions, suggesting a robust outlook for the economy. Inflation has "moderated to a historic low and remained well below the target", while financial conditions stayed benign and the flow of financial resources to the commercial sector rose sharply compared with last year. Favorable supply conditions, including prospects of a good kharif harvest, have helped the drop in food prices.
The RBI also reported a slight depreciation of the Indian rupee against the US dollar in October, influenced by a stronger dollar following the Federal Reserve's policy announcements. In mid-October, the rupee experienced a brief appreciation due to optimism surrounding India-US trade talks and renewed foreign portfolio investment inflows. Between November 1 and 21, the rupee appreciated by 0.1% compared to its level at the end of October. To manage pressure on the rupee, the RBI intervened in the foreign exchange market, net selling USD 7.91 billion in September.
The RBI said the mix of fiscal, monetary, and regulatory actions this year should support a rise in private investment, productivity, and growth. This cycle could build long-run resilience. Fiscal, monetary, and regulatory measures are set to foster a "virtuous cycle" of growth driven by private investment, according to the Reserve Bank of India's (RBI's) November Bulletin.
FDI inflows during April–September 2025 were higher than in the same period last year on both a gross and net basis. In September alone, gross inward flows remained robust.
