India’s economy continued to display stability in September 2025 despite global challenges, according to the Ministry of Finance’s latest Monthly Economic Review. The report pointed to strong domestic demand, low inflation, and robust foreign exchange reserves as key indicators of resilience, though it cautioned that global and domestic risks remain.
The review underlined that India’s economic activity remains steady, supported by GST reforms, festive spending, and consistent household demand. Indicators such as e-way bill generation, vehicle sales, and FMCG consumption signal continued expansion.
The IMF has raised India’s GDP growth forecast for FY26 to 6.6%, while the Reserve Bank of India (RBI) expects 6.8%. These projections reflect optimism about India’s near-term economic outlook amid a cautious global environment.
While the global economy shows slight improvement, risks persist. The IMF increased its 2025 global growth forecast to 3.2% from 3% due to improved trade dynamics and lower tariffs. However, concerns remain over high sovereign bond yields, weaker Chinese recovery, and rising U.S. unemployment.
The Finance Ministry warned that trade tensions and protectionist policies could affect future growth, urging continued policy vigilance to navigate uncertainties.
Retail inflation stood at 1.54% in September, driven by easing food prices. Food inflation turned negative at -2.28%, helping to keep headline inflation stable. Core inflation remained steady at 4.6%.
The report, however, noted potential risks from weather-related disruptions and global price fluctuations in food and oil, which could impact inflation in coming months.
India’s exports rose 4.4% in the first half of FY26, totalling $413.3 billion. The growth was led by strong services exports, up 6.1%, and electronics shipments, which surged 42%.
Forex reserves remained steady at $697.8 billion, sufficient to cover over 11 months of imports. While trade growth remains healthy, the ministry highlighted potential risks from fluctuating crude prices and global demand pressures.
The labour market showed improvement with a participation rate of 55.3% and unemployment easing to 5.2%. Hiring in technology and AI-linked roles rose significantly, although agricultural employment declined.
India’s banking system remains well-capitalised, with liquidity levels above ₹5.2 lakh crore. The RBI’s new Expected Credit Loss (ECL) framework and ongoing GST reforms are expected to support credit expansion and strengthen financial stability.
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The Finance Ministry’s review concluded that India’s fundamentals remain sound, with strong demand, manageable inflation, and solid reserves. However, it called for continued policy focus on food supply stability, export diversification, and reform acceleration.
By emphasising innovation, rural growth, and skilling initiatives, the review noted that India can maintain steady momentum and remain well-positioned amid evolving global conditions.
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Published on: Oct 28, 2025, 7:04 PM IST
Suraj Uday Singh
Suraj Uday Singh is a skilled financial content writer with 3+ years of experience. At Angel One, he excels in simplifying financial concepts. Previously, he cultivated his expertise at a leading mortgage lending firm and a prominent e-commerce platform, mastering consumer-focused and engaging content strategies.
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