A further pick-upin demand conditions witnessed in October 2025 points towards a resilientgrowth outlook, Reserve Bank of India (RBI) officials wrote in the November edition of RBI Bulletin released on Monday.
They said despite continued global headwinds, Indian economy showedsigns of a further pick up in momentum.
“Available high-frequencyindicators for October suggest a robust expansion inboth manufacturing and services activities, supported byfestive season demand and the ongoing positive impact ofthe GST reforms,” they wrote in the article ‘State of the Economy’.
Stating that headline inflation had moderated and fallen toa historic low in October and remained below the target rate, they said it was significantly helped byfavourable supply-side factors, including the prospectsof a good kharif season and the reduction of GSTrates.
Headline CPI inflation, moderated to0.3% in October 2025from 1.4% inSeptember. The fall in inflation was driven by thedeepening of deflation in food prices and impact ofthe GST rate cut on goods and services prices, amidlarge favourable base effects, they wrote.
The deflation in the food group deepened onaccount of a decline in the prices of vegetables, pulsesand spices. Inflation in sub-groups such as cereals,meat and fish, milk and products, eggs, oils and fats,fruits, prepared meals, and non-alcoholic beverages moderated, they added.
“The external sector’s capacity to absorb shockshas also improved over time, building resilience amidglobal trade policy uncertainties,” they emphasised in the article.
Pointing out to the World Bank’s Financial Sector Assessment(FSA) report of October 2025, which highlighted a financialsystem growing in resilience and strength, they said the improvedmacroeconomic frameworks and outcomes had notonly enhanced the ability of financial institutionsto support the macroeconomy, but also allowed theReserve Bank to better calibrate regulatory measures, improve the efficiency of financial intermediation, and augment the flow of credit to the broadereconomy.
The fiscal, monetary, and regulatorymeasures undertaken so far this year should pave theway for a virtuous cycle of higher private investment,productivity, and growth, leading to long-termeconomic resilience, the officials wrote.
The officials said global uncertainty remained elevated, althoughOctober witnessed a slight pullback after more than ayear of continuous increase.
“Concerns persist about theheightened exuberance in global equity markets, raisingquestions about its sustainability and its implicationsfor financial stability,” they said.
They said financial market volatility, which had moderated in October,resurged in November due to concerns overstretched valuations in AI stocks.
“In this context,concerns persist about the heightened exuberancein global equity markets, raising questions about itssustainability and the financial stability implications of any sharp correction,” they cautioned.
On the currency, they said the Indian rupee (INR) depreciated against the U.S. dollar, reflecting the impactof a stronger U.S. dollar following the U.S. Fed’s policyannouncement around the end of the month.
“In mid October, however, the INR registered a brief but sharpappreciation, supported by optimism over India-U.S.trade talks and renewed net FPI inflows Consequently, rupee volatility increased marginallyduring the month, although it remained relativelycontained compared with most major currencies,” they stated.
They said the Indian equity markets gained in October and November as optimism surrounding the India-U.S. tradedeal and corporate earnings for Q2 2025-26 offset thedrag from the uncertainty surrounding the U.S.-China tradenegotiations.
Domestic equity markets were alsosupported by a moderation in crude oil prices and apolicy rate cut by the U.S. Federal Reserve, they said.
Realty, oiland gas, and telecom emerged as the top-performingsectors during October. In equity markets, domesticinstitutional investors (DIIs) continued to be netbuyers, while foreign portfolio investors (FPIs)turned net buyers in October after a phase of threeconsecutive months, they added.
Published – November 24, 2025 08:45 pm IST
