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Informist, Wednesday, Sept. 24, 2025

 

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--RBI paper:GST reforms to result in sustained positive impact on India econ 
--CONTEXT: Remarks from RBI's monthly State of the Economy article 
--RBI paper: GST reforms to lead to ease of doing business 
--RBI paper:GST reforms to lower retail prices, strengthen consumption growth 
--RBI paper: India growth outlook for Oct-Mar is one of optimism 
--RBI paper: Healthy corporate balance sheets bright spot of India econ 
--RBI paper: High kharif sowing to sustain growth momentum in farm sector 
--RBI paper: High kharif sowing to keep food prices in check 
--RBI paper: Transmission of monetary policy easing measures robust 
--RBI paper:Stage set for sustained pick-up in consumption demand in Oct-Mar 
--RBI paper: Stage set for cycle of higher investments, stronger growth 
--RBI paper:High-frequency data for econ activity showed steady growth in Aug 
--RBI paper:Immediate impact of 50% US tariff on India may be sector-specific 
--RBI paper: Around 45% of India's goods exports to US exempted from tariffs 
--RBI paper: India's CAD expected to remain low, rangebound throughout FY26 

 

NEW DELHI – A stronger-than-expected GDP growth in the June quarter, healthy corporate balance sheets, and the overhaul of the goods and services tax regime have set the stage for a sustained pick-up in consumption demand in the second half of 2025-26 (Apr-Mar), the Reserve Bank of India's staff said in the monthly State of the Economy article released Wednesday.

 

The overall growth outlook for Oct-Mar is "one of optimism", the RBI staff said. Moreover, the current domestic economic landscape has also set the stage potentially for a "virtuous cycle of higher investments and stronger growth impulses, overcoming persistent global uncertainties", the staff said in the article, which is part of the RBI's monthly bulletin. Comments in the article do not represent the views of the central bank.

 

India's GDP grew at a five-quarter high pace of 7.8% in the June quarter, much higher than the RBI's forecast of 6.5%. The stronger-than-expected June quarter print has prompted economists to raise their forecasts for the full-year growth. The RBI had projected India's GDP to grow 6.5% in FY26 in August.

 

"The Q1:2025-26 (Apr-Jun) GDP estimates reinforced the resilience of domestic growth drivers. High frequency indicators for August show manufacturing and services activity at a decadal high," the RBI staff said. "Healthy corporate balance sheets and the focus on structural reforms by the government are the bright spots of the economy."

 

The GST Council had earlier this month reduced the number of GST slabs from four to two, leading to a reduction in the tax burden for households. The changes made to the GST regime are expected to progressively have a sustained positive impact on the Indian economy, the RBI staff said. The changes to the GST are expected to boost tax buoyancy, improve compliance, ease of doing business, lower retail prices, and strengthen consumption growth drivers, the staff said.

 

A higher kharif sowing is also expected to translate to a sustained growth momentum in the agriculture sector, while also keeping food prices under check, the central bank staff said. The transmission of the front-loaded monetary policy easing measures, which included 100 basis points of interest rate cuts, has been robust, the staff said. The economy remained resilient in August, with high-frequency indicators showing steady growth. Rural demand remained robust last month, though urban demand continued to show some weakness, it said. 

 

Regarding the US tariffs, the RBI staff said the immediate impact of the 50% duty on Indian goods may be sector-specific. Around 45% of India's merchandise exports to the US are exempt from tariffs, including sectors constituting major export products, particularly smartphones and pharmaceuticals, the paper said.

 

"Despite elevated global trade uncertainties, India's external sector exhibited resilience," the RBI staff said. The current account deficit moderated to 0.2% of GDP in the June quarter from 0.9% of GDP a year ago, supported by strong services exports and robust remittance inflows. "These trends are expected to keep the deficit low and range-bound throughout the year."  End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

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