Summary
September 2025 saw record-low inflation at 1.54%, improved GDP forecast (6.8%), narrowing CAD, and forex reserves nearing $701 billion. RBI maintained repo at 5.5% amid low NPAs. GST 2.0 simplified tax slabs with major rate cuts, while UPI expanded globally with Qatar adopting India’s digital payment system.
Detailed Analysis
1: Macro Indicators & Growth
1. Record-Low Inflation (September 2025)
- CPI (Retail Inflation): Slipped to a multi-year low of 1.54% in September. This was driven by a prolonged 9-month decline in food prices and the immediate cooling effect of GST rate cuts.
- WPI (Wholesale Inflation): Averaged a near-flat 0.02%, indicating significant easing of input costs for manufacturers.
- GDP Forecast: The RBI upgraded its real GDP growth forecast for FY 2025-26 to 6.8% (from 6.5%), citing resilient domestic demand and a surge in festive-season production.
2. Fiscal Health
- Current Account Deficit (CAD): Narrowed sharply to 0.2% of GDP in Q1 FY26, supported by an all-time high in services exports ($387.6 billion).
- Foreign Exchange Reserves: Reached a historic milestone of $701.4 billion by early 2026, with the momentum beginning in September 2025.
2: Banking & Monetary Policy
1. RBI Monetary Policy (Sept 29 – Oct 1)
- Repo Rate: Maintained at 5.50% with a "Neutral" stance. The RBI shifted from "withdrawal of accommodation" to a neutral position, signaling possible future rate cuts given the low inflation.
- NPA Milestone: Gross Non-Performing Assets (GNPAs) of banks hit a multi-decadal low of 2.2% in September 2025.
2. Banking Reforms
- Universal Bank License: AU Small Finance Bank became the first SFB in India to receive in-principle approval from the RBI to transition into a Universal Bank.
- Banking Laws (Amendment) Act, 2025: Enhanced governance in Public Sector Banks (PSBs) and allowed for private sector candidates to apply for MD & CEO positions in nationalized banks to infuse professional talent.
3: NPCI & Digital Payments (GST 2.0)
1. "GST 2.0" – The 56th GST Council Meeting (Sept 3-4)
The Finance Minister rolled out the most sweeping overhaul of the GST since its 2017 inception, effective September 22, 2025.
- Slab Rationalization: The complex 4-tier system (5%, 12%, 18%, 28%) was simplified toward a 2-slab system (5% and 18%).
- Key Rate Cuts:
- Healthcare: 33 life-saving drugs (Cancer, Rare Diseases) reduced from 12% to NIL.
- Daily Essentials: GST on Indian breads (Roti, Paratha), UHT milk, and essential food items like pasta and ghee reduced to 5% or NIL.
- Automobiles: GST on small cars and motorcycles (≤ 350cc) reduced from 28% to 18%.
- De-merit Tax: A special 40% rate was introduced for luxury and "sin" goods (tobacco, high-end luxury cars).
2. UPI Global Expansion (Qatar)
- The News: Qatar became the 8th country to adopt India’s UPI payment system.
- Details: Launched initially at Qatar Duty Free (Hamad International Airport), allowing Indian tourists to pay in INR via QR codes, eliminating currency exchange hassles.