The Indian economy continued to gather momentum in October despite persistent global headwinds, supported by stronger manufacturing and services activity, festive demand and the ongoing impact of GST reforms, according to the Reserve Bank of India’s monthly bulletin released on Monday.
The bulletin notes that inflation has eased to a historic low and remains below the target range. The decline was led by lower food prices, GST rate reductions and favourable base effects. Financial conditions stayed supportive, with a sharp increase in the flow of financial resources to the commercial sector compared to the previous year.
GST collections improved over the previous month, indicating sustained consumer spending. Sowing of rabi crops is progressing well after kharif harvesting.
High-frequency indicators for October pointed to a broad uptick in manufacturing and continued strength in the services sector. However, the merchandise trade deficit widened to a record level in October 2025. Exports contracted after three months of expansion due to global weaknesses, while imports surged, driven largely by higher gold and silver purchases linked to festive demand.
To limit the impact of external trade disruptions, the Reserve Bank has rolled out several trade relief measures for exporters with immediate effect. The bulletin adds that tariff exemptions on certain agricultural products announced by the United States on November 14, 2025, are expected to support Indian shipments.
Equity markets recorded gains in October–November, influenced by positive sentiment around the India–US trade deal and strong Q2 2025-26 corporate earnings. Primary market mobilisation also improved sharply in October compared to the previous month, with initial public offerings (IPOs) during April–October 2025 exceeding last year’s levels. Participation from both foreign portfolio investors and domestic institutional investors remained strong.
Despite the uncertain global trade environment, the RBI states that India’s economy remains resilient due to strong services exports, steady remittance inflows and stable oil prices. Foreign exchange reserves are assessed to be sufficient to absorb external shocks. External debt as a share of GDP remains low and stable, with the portion of short-term debt also staying subdued.
–IANS