‘GST rationalisation boosts Economic Activity’: Finance Ministry Releases Monthly Economic Review [Read Order]
Foreign exchange reserves remained robust at USD 687 billion, providing 11 months of import cover, stated the report.
The Ministry of Finance has released the Monthly Economic Review of October 2025. According to the report, the recent reduction of GST (Goods and Services tax) rates has reinforced consumption, increased economic activity, and supported the expansion of growth across sectors.
According to the Review, high-frequency indicators such as e-way bill generation, automobile sales, UPItransaction values, and tractor sales reflect a broad-based improvement in both urban and rural demand. E-way bill generation rose 14.4% YoY in September - October 2025, while cumulative GST collections for April - October grew 9%, showing adaptable revenue despite tax rate cuts.
The Finance Ministry reported that tax relief, productivity increases, and technology investments led to an important increase of manufacturing and services activity, with the Manufacturing PMI reaching 59.2 and the Services PMI reaching 58.9. Fuel demand reached a five-month high, showing the improvement in fuel consumption as well.
The Review also reported that headline inflation had fallen to an all-time low of 0.25% in October 2025 driven by food price correction, GST transmission, and favourable base effects. Food inflation dropped by 5%, the steepest decline in a decade, contributing to a benign inflation outlook.
On the external front, India showed mixed signals that merchandise exports softened due to a spike in gold and silver imports, but services exports hit a record USD 38.5 billion, helping offset nearly half of the merchandise trade deficit. Foreign exchange reserves remained robust at USD 687 billion, providing 11 months of import cover.
Corporate sector performance remained strong in Q2 FY26, with net profits rising 12.3% YoY and profit margins at multi-year highs. Domestic financial markets also made stronger in October, supported by secured institutional participation and relaxing the inflation expectations.
“The favourable impact of GST rationalisation is increasingly visible in consumption indicators”, concluded the review report.
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