India’s overall economic activity remained steady in November, supported by strong demand conditions led by urban consumption, even as manufacturing output and rural demand showed early signs of slowing, according to the State of the Economy article published by Reserve Bank of India officials in the central bank’s December bulletin. The assessment noted that post festival momentum continued to sustain growth, with services emerging as a key pillar of resilience.
High frequency indicators suggested that economic activity held firm in November despite lower Goods and Services Tax collections, which were largely influenced by rate rationalisation.
Other indicators such as e way bills generation, petroleum consumption and digital payment volumes recorded improved growth, indicating underlying strength in demand and transactions across sectors.
RBI Governor Sanjay Malhotra, during the latest Monetary Policy Review, observed that while domestic economic activity remained resilient in the third quarter of financial year 2025–26, certain leading indicators pointed to a moderation in growth momentum in the second half compared with the first half. This reflected uneven demand conditions across segments of the economy.
Retail passenger vehicle sales expanded at their fastest pace in over a year, supported by GST benefits, marriage season demand and improved supply conditions. Domestic air passenger traffic also recorded its strongest growth since May 2025. Tractor sales showed a notable recovery, aided by positive rabi season prospects, lower GST rates and higher minimum support prices for rabi crops. However, other indicators of rural demand, particularly retail automobile sales, slowed sharply in the post festive period, partly due to adverse base effects.
On the currency front, the Indian rupee weakened against the US dollar in November, driven by a stronger dollar, subdued foreign portfolio inflows and uncertainty surrounding the India US trade deal.
Despite this, rupee volatility moderated and remained lower than that of many major global currencies. In December up to the nineteenth, the rupee depreciated by around 0.8 percent compared with end November levels. In real effective terms, the currency remained broadly stable as domestic price pressures offset nominal depreciation.
Retail inflation edged up to 0.7% in November from a record low of 0.3% in October, mainly due to unfavourable base effects. Even so, inflation stayed below the RBI’s lower tolerance threshold of 2%t for the third consecutive month. Core inflation excluding food and fuel remained steady at 4.3% and dropped to a new historic low of 2.4% after adjusting for gold and silver prices.
The Monetary Policy Committee’s decision to cut the repo rate by 25 basis points to 5.25% was guided by the benign outlook for both headline and core inflation, which provided room for policy support to sustain growth momentum.
Recent food price data for December indicated rising cereal prices, moderation in gram prices, higher tur or arhar dal prices, increased sunflower and groundnut oil prices, and a rise in tomato and onion prices, while potato prices eased.
Equity markets stayed buoyant for much of the year on optimism surrounding large technology firms, though concerns about elevated valuations have recently led to a shift toward risk aversion. Portfolio flows to emerging markets have turned negative after six months of positive inflows.
The RBI bulletin concluded that while the Indian economy continues to face external headwinds, coordinated fiscal, monetary and regulatory measures have strengthened resilience. Supported by strong domestic demand, economic growth has remained robust, and continued focus on macroeconomic stability and structural reforms is expected to enhance productivity and keep India on a high growth path in a rapidly evolving global environment.