New Delhi: India’s consumption surged in October, buoyed by the festive season and up to date rationalization in items and providers tax charges, displaying financial resilience at the same time as international progress stays unsure, SBI Capital Markets mentioned in its newest EcoCapsule report launched on Monday. The pickup, it famous, displays a decisive turnaround in demand after a sluggish monsoon quarter, with households and companies alike stepping up spending.
The funding banking arm of the State Financial institution of India drew its optimism from a string of upbeat indicators: a 41% year-on-year soar in car gross sales, file digital funds, and the strongest festive spending in years. Unified Funds Interface (UPI) transactions hit an all-time excessive of two.7 billion, whereas Diwali gross sales climbed 25% to over ₹6 trillion, underscoring how home demand continues to drive India’s progress at the same time as exports and international commerce stay weak.
“With PMI (buying managers’ index) indicators sustaining their sanguinity and continued spending push from the federal government by way of capex and revex, the softness seen resulting from heavy monsoons in Q2 appears to have made means for a sunny Q3,” the report mentioned.
“We proceed to anticipate nominal GDP progress at about 8.5% y/y (for July-September FY26), with actual GDP supported by a low deflator and consumption pickup,” it added.
India’s economic system grew at a brisk tempo within the first quarter of FY26, with actual GDP increasing round 7.8% and nominal GDP rising shut to eight.8%, supported by resilient home demand and improved consumption following GST price cuts.
Offsetting weak exports
The pickup in India’s shopper spending offset a number of the hit from weak exports and international headwinds.
Whereas tariff tensions and coverage uncertainty overseas proceed to cloud the worldwide outlook, India’s robust home demand, bolstered by GST price cuts and festive spending, is anticipated to maintain sturdy consumption momentum within the coming quarters.
“Manufacturing PMI expanded sharply to 59.2 in Oct’25, with a sooner improve in new orders underpinning buoyant demand resulting from GST aid and productiveness features,” it mentioned. “Robust demand led to producers elevating output costs at a 12-year excessive tempo, whereas slowing enter value inflation means growth of margins.”
The report additionally identified {that a} new commerce settlement between Washington and Beijing, slicing tariffs on Chinese language items under 50% and easing the circulate of uncommon earths, has supplied some respite to Indian companies.
The nation’s financial institution credit score can also be reviving on the again of retail lending, even because the economic system awaits a broad-based company capex cycle, with the credit-deposit ratio crossing 80% as soon as once more, the report mentioned. “We anticipate that recent time period deposit charges have bottomed out within the close to time period, and that is coinciding with renewed drivers of credit score progress,” the report mentioned.
Sustainable pickup anticipated
“With the outlook for the speed trajectory remaining benign and hope of personal giant company capex nonetheless alive, we anticipate a sustainable pickup in credit score progress within the medium time period, with financial institution credit score progress clocking 1.3-1.5x of nominal GDP progress in FY26,” it added.
On the exterior entrance, SBI Caps identified that the rupee’s slide towards the greenback to file lows prompted the Reserve Financial institution of India (RBI) to intervene aggressively within the forex markets. To make sure, the central financial institution bought $7.7 billion in August to stabilize the change price.
International portfolio inflows inot India recovered in October, offering some respite, although the influence of risky “sizzling cash” flows will stay a key monitorable, the report mentioned.
“Furthermore, commerce deficit stays prey to vary in India’s crude basket and anticipated bump up in gold imports through the festive interval. The silver lining is that regardless of these challenges, CAD (present account deficit), at about 1% of nominal GDP in FY26, is anticipated to be nicely inside historic ranges,” it mentioned.
“Together with a $700 bn foreign exchange reserve, it presents a fortress to protect towards international swings,” the report added.
