GST 2.0, festive boom keep India’s growth engine running among global headwinds

IN NEWS

GST 2.0 and Festive Boom Sustain India’s Growth Amid Global Headwinds

(Source: The Hindu BusinessLine | October 27, 2025 | By Shishir Sinha | New Delhi)

India continues to stand out as a resilient economy despite global slowdown concerns, according to the Finance Ministry’s Monthly Economic Review (MER) for September 2025.

The report attributes the country’s robust growth momentum to GST 2.0, festive demand, and RBI’s structural reforms.

KEY HIGHLIGHTS

1. Global Context

• Global growth faces challenges from China’s weak demand, inflationary pressures in advanced economies, and policy volatility.
• IMF projects global growth at 3.2% in 2025, but warns of a slowdown in 2026.

2. India’s Economic Resilience

• India’s economy continues to accelerate, powered by strong domestic consumption and policy reforms.
• The introduction of GST 2.0has:
  • Boosted consumer sentiment,
  • Reduced compliance costs,
  • Encouraged spending and investment.
• E-way bills reached an all-time high in September, signaling record movement of goods.
• Fuel consumption rose: Petrol +8%, Diesel +6.7% YoY.

3. Festive Demand Surge

• Navratri sales boom:
  • Passenger vehicles +34.8%
  • Two- & three-wheelers +35.3%
• FMCG and retail sectors reported strong double-digit sales growth, indicating robust rural purchasing power.

4. Growth Forecasts

• IMF: 6.6% GDP growth (FY26)
• RBI: 6.8% GDP growth, citing sustained demand and reforms.

5. RBI and Financial Sector Measures

• Despite slower bank credit growth, total financial resource flow to the commercial sector remains high.
• Rise attributed to non-bank financial channels (corporate bonds, market borrowings).

6. Inflation & Agriculture

• Retail inflation: 1.54% in September (lowest in 5 years).
• Food prices: Deflation of 2.28% (vegetables & pulses).
• RBI projection: Inflation to stay near 1.8% this quarter, improving household purchasing power.
• Agriculture:
  • Kharif sowing largely complete.
  • Positive trends in cereals & pulses.
  • Minor decline in oilseeds/cash crops due to weather events.

7. Outlook

The report concludes that India’s growth outlook remains strong, driven by structural reforms and resilient demand, though external risks—including trade slowdowns and global financial volatility—require continued caution.

Updated - October 27, 2025 at 09:35 PM | Business Line