RBI Highlights India's Resilient 6.8% Growth Projection Boosted by Tax Cuts and Rate Reductions

The Indian government's domestic tax reductions and the Reserve Bank of India's interest rate cuts this year will help boost private investment and economic growth, the central bank said in its monthly bulletin on Monday. In October, the Indian economy exhibited signs of pickup in growth momentum despite persisting global headwinds, the central bank said.

"Available high-frequency indicators for October suggest a robust expansion in both manufacturing and services activities, supported by festive season demand and the ongoing positive impact of the goods and services tax reforms," the central bank said.

India cut taxes on hundreds of consumer items ranging from soaps to small cars in September to spur domestic demand in the face of economic headwinds from punishing U.S. tariffs.

Also, the Indian central bank had cumulatively cut its key interest rates by 100 basis points so far in 2025.

"In the midst of continuing uncertainty on global trade policies and concerns about their domestic impact, Indian economy continues to be resilient to external sector shocks," the RBI said.

India's central bank has projected the economy to grow at 6.8% for the financial year 2025-26.

Average headline inflation, meanwhile, has fallen to an all-time low, much below the central bank's target of 4% this financial year, it said.

Headline consumer price index inflation, moderated to 0.3% in October 2025 from 1.4% in September.

The fall in inflation was driven by the falling prices and impact of the tax cuts, amid large favourable base effects, RBI said.