Source: BS
Context:
The RBI’s November 2025 Bulletin, in its feature article “State of the Economy”, highlights that India’s economic momentum is strengthening, supported by coordinated fiscal, monetary, and regulatory actions. These measures are expected to trigger a virtuous cycle of higher private investment, productivity, and long-term growth.
Key Highlights from the RBI Bulletin:
Economic Momentum Strengthening
- High-frequency indicators for October 2025 show:
- Strong expansion in manufacturing and services.
- Support from festive season demand.
- Continued positive impact of GST reforms on supply chains and formalisation.
- Despite global headwinds, India’s domestic activity remains resilient.
Inflation and Financial Conditions
- Inflation has moderated to a historic low, staying well below the target rate.
- Financial conditions remain benign, enabling:
- Improved liquidity.
- Stable borrowing costs.
- Better flow of financial resources to productive sectors.
Impact of Fiscal, Monetary & Regulatory Measures
RBI notes that 2025 policy actions are laying the foundation for a virtuous cycle. These actions aim to:
- Boost private sector investment.
- Improve productivity through structural reforms.
- Strengthen long-term economic resilience.
Examples of these measures include:
- Fiscal consolidation with targeted capital expenditure.
- Monetary stability through calibrated policy.
- Regulatory reforms such as:
- Consolidation of norms into 238 master circulars.
- Repeal of nearly 9,000 outdated circulars, improving ease of compliance.
Global Economic & Financial Environment
- Global uncertainty remains elevated.
- October witnessed a slight pullback in global risk levels after a year-long rise.
- Concerns highlighted by RBI authors:
- Exuberance in global equity markets.
- Risks of unsustainable valuations.
- Potential spillovers to financial stability.
Significance of These Findings
For the Indian Economy
- Stronger private investment cycles likely in coming quarters.
- Healthy demand conditions indicate sustained recovery.
- Low inflation + stable financial conditions = supportive macro environment.
- Enhances India’s resilience against global shocks.
For Policy & Governance
- Reinforces the importance of coordinated fiscal–monetary action.
- Highlights successful implementation of GST-related improvements.
- Draws attention to global risks requiring careful monitoring.
