Indian economy resilient, stable on GST fillip to consumption, easing inflation: Finance Ministry

Finance ministry today said economic activity has gained momentum following the reduction in the Goods and Services Tax (GST) announced in September. In the monthly economic review for October, the ministry said the domestic economy remained “stable” and “resilient” on the back of easing inflation, and firm consumption.

“Macroeconomic developments in October 2025 indicate a stable and resilient domestic economy, supported by easing price pressures, firm consumption trends and the early impact of recent policy interventions,” the ministry said in the monthly economic review.  

“The rationalisation of GST rates has provided a measurable boost to consumption, as reflected in the strengthening of high-frequency indicators, including higher e-way bill generation, record festive-season automobile sales, robust UPI transaction values, and a notable rise in tractor sales. These developments point to broad-based improvements in demand conditions across both urban and rural segments,” it added.

Economic activity has gained momentum, as reflected in the performance of various high-frequency indicators, the report said. “Eway bill generation expanded by 14.4 per cent during September and October 2025, on a year on-year basis. At the same time, cumulative GST collection growth of 9.0 per cent for Apr–Oct 2025 indicates that the underlying revenue stream has remained resilient, aided by firm consumption and improved compliance,”

The ministry said in the report that the headline inflation eased to an all-time low of 0.25 per cent in October, driven by the transmission of GST cuts, a favourable base effect and pronounced declines in food prices.

“Core inflation remained stable, while the timely progress of Rabi sowing—supported by adequate soil moisture and healthy reservoir levels—continues to reinforce a benign food supply outlook,” it added.

On the external front the government pointed out that the environment remains characterised by elevated trade policy uncertainty, though global pressures have moderated relative to earlier peaks. “India’s merchandise exports softened in October due to a surge in gold and silver imports, while services exports achieved their highest-ever monthly level, providing a substantial buffer to the merchandise trade deficit,” the ministry said in the report.

“Capital flows were mixed, with strong FDI inflows offsetting subdued portfolio activity; India’s foreign exchange reserves of USD 687 billion continued to provide a substantial buffer against external shocks,” it pointed out.

Momentum was also evident in the production economy. “In October, the manufacturing sector continued to show improvement, with the Manufacturing Purchasing Managers' Index (PMI) rising to 59.2 from 57.5 in September. This increase was driven by GST relief, productivity enhancements, and investments in technology. Additionally, service activity remained strong, with the PMI for services in October 2025 at 58.9, well above the 50 mark that separates expansion from contraction,” the report said.

“Fuel demand echoed this broader improvement. Petrol consumption climbed to a five-month high, supported by festive-season travel, and expanded 7.4 per cent YoY. Diesel demand also reached a four-month high, though its YoY growth stayed flat. Trade indicators pointed to continued resilience. Port cargo activity, which continued to show growth momentum in October 2025, expanded by double digits, indicating robust trade activity,” it added.