India's economic landscape is currently marked by an optimistic outlook, fueled by a confluence of factors including the ongoing festive season, successful implementation of GST reforms, and a resilient export sector. Both domestic and international experts are highlighting India's growing economic prowess and its potential to become a leading global economy.
Festive Season Ignites Consumer Spending and Economic Growth
The Diwali festive season is poised to inject a massive surge into India's economy, with consumer spending expected to reach an impressive Rs 3.5 lakh crore, marking a 20% increase from the previous year. This festive buoyancy is a critical driver for household consumption, which constitutes 60% of India's Gross Domestic Product (GDP). The Confederation of Indian Industry (CII) has recognized Diwali as a pivotal economic event, stimulating retail expansion, funding flows, and the growth of Micro, Small, and Medium Enterprises (MSMEs).
Evidence of this festive surge is already visible. Despite soaring prices, gold and silver are witnessing record demand, especially during Dhanteras, although gold purchases saw a decline in volume due to high prices, while silver sales soared. Strong buying was also observed in cars, two-wheelers, and consumer electronics. Furthermore, festive demand coupled with a tech push has propelled India's Private Equity and Venture Capital (PE-VC) deal value to US$ 26 billion in 2025. The hospitality and entertainment sectors are also experiencing a significant boost, with a surge in dining and entertainment spending ahead of Diwali.
GST Reforms Drive Consumption and Bolster GDP
Union Finance Minister Nirmala Sitharaman announced that the benefits of the recent GST 2.0 reforms, effective since September 22, have successfully been passed on to consumers for 54 daily-use items. This has led to a significant increase in consumption, with electronics sales alone reportedly rising by 25% during Navratri. The government anticipates that this surge in consumption will substantially contribute to India's GDP for the financial year 2025-26, with an expected growth of over 10% in nominal terms. Commerce & Industry Minister Piyush Goyal further highlighted that these reforms are already showing a "multiplier effect" on investment, business, and industry.
Positive Export Growth and Strengthening Trade Ties
Commerce and Industry Minister Piyush Goyal expressed strong confidence in India achieving positive export growth in the current financial year (2025-26), despite global trade disruptions and US tariffs. India's overall goods and services exports have already grown by approximately 5% to reach $413.3 billion during April-September FY 2025-26. Goyal emphasized the resilience and global demand for Indian goods and services, stating that India will continue its growth trajectory.
In terms of trade relations, talks between India and the United States for a bilateral trade agreement are progressing in a "cordial atmosphere," with India prioritizing the interests of its farmers, fishermen, and MSME sectors. Additionally, Minister Goyal is scheduled to visit Brussels later this month to accelerate negotiations for a Free Trade Agreement (FTA) between India and the European Union, a crucial step given the EU market accounts for about 17% of India's total exports.
India's Rising Global Economic Stature
International Monetary Fund (IMF) Managing Director Kristalina Georgieva lauded India's economic reforms, recognizing the nation as a "key growth engine" and raising India's 2025 growth forecast to 6.6%. Prime Minister Narendra Modi, speaking at the NDTV World Summit, affirmed India's transition from being among the "fragile 5" to one of the "top five" economies globally, boasting inflation below 2% and a growth rate exceeding 7%. Former UK Prime Minister Rishi Sunak echoed this sentiment, calling India an "economic superpower" and noting its achievement of surpassing Japan to become the world's fourth-largest economy by nominal GDP. Industry leaders at the same summit also voiced strong belief in India's imminent rise to become a leading global economy.
Banking Sector Witnesses Mixed Q2 Results Amidst Strategic Moves
The second quarter (Q2 FY26) saw major Indian banks releasing their earnings reports, presenting a mixed picture. HDFC Bank, India's largest private lender, reported an impressive 11% (or 10.8% in some reports) rise in net profit to Rs 18,641 crore, driven by a significant jump in non-interest income and improved asset quality. ICICI Bank also recorded a healthy net profit growth of 5.2% to Rs 12,359 crore. Public sector giant Punjab National Bank (PNB) saw its Q2 profit increase by 14% to Rs 4,904 crore, while Yes Bank reported an 18.3% rise in net profit to Rs 654 crore.
However, some banks faced challenges. IndusInd Bank reported a net loss of Rs 437 crore, attributed to accelerated write-offs and increased provisions in microfinance. Federal Bank also experienced a 9.5% decline in net profit. In a significant development for the banking sector, Dubai's Emirates NBD announced its acquisition of a 60% stake in RBL Bank for $3 billion (approximately Rs 26,580 crore), marking one of the largest foreign direct investment deals in the Indian banking sector.