Indian Economy Shows Robust Growth Despite Global Headwinds: RBI Bulletin Highlights GST Benefits and Festive Demand

The Indian economy has displayed clear indications of accelerating momentum, despite ongoing global challenges. According to the RBI monthly bulletin released on Monday, high-frequency indicators for October reveal strong expansion in both manufacturing and services sectors, bolstered by festive season demand and the continuing positive effects of GST reforms.

Inflation has decreased to a historic low, remaining significantly below the target rate. This reduction in inflation was attributed to falling food prices, GST rate reductions on goods and services, and favorable base effects. The bulletin notes that financial conditions have remained favorable, with financial resources flowing to the commercial sector increasing substantially compared to the previous year.

GST revenue collection has improved from the previous month, signaling a robust increase in consumer demand. The sowing of rabi crops is progressing favorably following the kharif crop harvest.

October's high-frequency indicators suggest further expansion of manufacturing activity alongside continued robust growth in the services sector. However, the merchandise trade deficit widened to an all-time high in October 2025.

While exports contracted after three months of expansion, reflecting adverse impacts from global headwinds, imports surged due to increased gold and silver purchases during the festive season, according to the RBI bulletin.

To counter the effects of trade disruptions on exports caused by global challenges, the Reserve Bank implemented immediate trade relief measures for exporters. The bulletin observes that tariff exemptions on certain agricultural products by the US on November 14, 2025, will benefit Indian exports.

The RBI bulletin highlights that Indian equity markets gained ground in October-November amid positive signals regarding the India-US trade deal and healthy corporate earnings for Q2:2025-26.

Primary market activity recorded a significant increase in October compared to the previous month. IPO fundraising during April-October 2025 was considerably higher than the previous year, with strong participation from both Foreign Portfolio Investors and Domestic Institutional Investors.

Despite continuing uncertainty regarding global trade policies and concerns about their domestic impact, the Indian economy remains resilient to external shocks, supported by strong services exports, robust remittance receipts, and favorable oil prices.

Foreign exchange reserves remain adequate to buffer against adverse external shocks. External debt as a proportion of GDP continues to be low and stable. Additionally, the share of short-term debt in total external debt remains low, the RBI bulletin concluded.