The IMF (International Monetary Fund) and the Reserve Bank of India (RBI) have indeed raised India’s GDP (gross domestic product) growth in FY26 to 6.6 per cent and 6.8 per cent, respectively. These projections must be read in the context of policy reforms and demand resilience seen at the ground level. The Finance Ministry’s Monthly Economic Review for September suggests that the acceleration in the Indian economy has to do largely with the introduction of GST 2.0 and a bumper festival season.
The Navratri festivities coincided with the implementation of GST 2.0 rate cuts. This seems to have spurred consumer sentiment and spending. Consequently, passenger vehicle retail sales expanded by 34.8 per cent over the same period last year, said the ministry, citing data from industry body FADA. Significantly enough, the growth was reportedly driven by new buyers as well as upgrades to premium variants. Two- and three-wheeler retail sales saw a strong 35.3 per cent growth during this period. Tractor sales hit a record high in September due to a combination of factors ranging from favourable monsoon conditions to lower GST rates and sustained rural purchasing power.
Key demand indicators – the e-way bill generation and the consumption of petrol and diesel – have all shown a rise. The retail inflation, at 1.54 per cent in September, was the lowest in five years. The Reserve Bank of India has indeed forecast the retail inflation to remain around 1.8 per cent during the current quarter. Perhaps, the easing inflation gives the monetary mandarins a lot more elbowroom to ponder over a rate cut in the next policy cycle meeting.
Indeed, most critical economic numbers have shown a healthy rise. That does bring cheers, no doubt. Can this momentum be sustained going forward? A lot depends on the external environment, which, at the moment, is very hazy. The global headwinds are strong. Intense recalibration of trading relations is on at the global level. The growth momentum could improve or stutter depending on how these negotiations pan out eventually. The task is cut out for New Delhi. For one, the demand momentum must be sustained. For another, private investment must be spurred. In a volatile global environment, speedy action both in terms of providing a support system and fixing policy roadblocks is a sine qua non for sustaining momentum. It calls for a proactive thought process.