Various high-frequency indicators reflect that India’s economic activity has gained momentum following the reduction in the Goods and Services Tax (GST), according to the Finance Ministry’s Monthly Economic Review released on Thursday.
E-way bill generation expanded by 14.4 per cent during September and October 2025 on a year-on-year basis. At the same time, cumulative GST collection growth of 9 per cent for April–October 2025 indicates that the underlying revenue stream has remained resilient, aided by firm consumption and improved compliance.
Momentum was also evident in the production economy. In October, the manufacturing sector continued to show improvement, with the Manufacturing Purchasing Managers’ Index (PMI) rising to 59.2 from 57.5 in September. This increase was driven by GST relief, productivity enhancements, and investments in technology, the report states.
Additionally, service activity remained strong, with the PMI for services in October 2025 at 58.9, well above the 50 mark that separates expansion from contraction. Fuel demand echoed this broader improvement. Petrol consumption climbed to a five-month high, supported by festive-season travel, and expanded 7.4 per cent year-on-year (YoY).
Diesel demand also reached a four-month high, though its YoY growth stayed flat. Trade indicators pointed to continued resilience. Port cargo activity, which continued to show growth momentum in October 2025, expanded by double digits, indicating robust trade activity, the report further states.
It also highlights that demand conditions remain broadly favourable, supported by robust rural spending and steady momentum in smaller urban centres, as indicated by FMCG volume growth in Q3 of 2025.
“Rural consumption continued to strengthen, driven by favourable agricultural incomes on the back of healthy crop output. At the same time, recovery in urban consumption is gaining momentum, mainly in smaller cities. The full impact of GST rationalisation on spending behaviour is likely to become more evident over the next two quarters,” the report mentioned.
In line with these developments, high-frequency consumption indicators for October are reflecting nascent signs of the beneficial impact of GST rationalisation, reinforcing its supportive role in sustaining economic activity. Automobile retail sales, as reported by the Federation of Automobile Dealers Associations, grew by 40.5 per cent YoY in October 2025, with both passenger vehicles and two-wheelers recording lifetime highs.
Further, an analysis of auto sales performance during the 42-day festive period of 2025 vis-a-vis 2024 indicates a strengthening of consumer sentiment in the ongoing year, with overall vehicle retail volumes surging by 21 per cent YoY as the sector registered its highest-ever sales and growth across categories, the report added.
