SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Reserve Bank of India (RBI) | Ministry of Finance | Ministry of Statistics and Programme Implementation (MoSPI)
The December 2025 edition of the Reserve Bank of India Bulletin, provides comprehensive information on monetary policy, economic statistics, financial data, and articles.
The Monetary Policy Committee (MPC) unanimously voted to reduce the policy repo rate by 25 basis points to 5.25 per cent in December 2025. This decision marks a significant pivot toward supporting economic growth, facilitated by an unprecedented period of “goldilocks” conditions where growth remains robust and inflation is exceptionally benign. The MPC maintained a neutral stance, though some internal debate emerged regarding a shift to an accommodative posture.
Macroeconomic Indicators India’s real GDP growth accelerated to a six-quarter high of 8.2 per cent in Q2:2025-26, driven by resilient domestic demand and festive spending. Simultaneously, headline inflation plummeted to a record low of 0.3 per cent in October 2025, breaching the lower tolerance threshold of 2 per cent for the first time since the adoption of flexible inflation targeting. This disinflation was primarily led by a sharp correction in food prices, while core inflation remained anchored at 2.6 per cent.
Liquidity and Stability To ensure durable liquidity, the RBI announced OMO purchases of government securities worth 1,00,000 crore and a USD 5 billion Buy/Sell swap. The banking system continues to show resilience, with Scheduled Commercial Banks reporting a robust Capital to Risk Weighted Assets Ratio (CRAR) of 17.24 per cent and a declining Gross Non-Performing Asset (GNPA) ratio of 2.05 per cent as of September 2025.
The RBI bulletin also carried four informative articles:
State of the Economy: The Indian economy showed resilience amidst global uncertainties, achieving high growth driven by domestic demand. Inflation remained below the lower tolerance level, and financial conditions were favorable.
Government Finances 2025-26: A Half-Yearly Review: The fiscal position of the Centre and States remained resilient in H1:2025-26, with significant growth in capital expenditure and steady revenue expenditure. GST collections showed robust growth due to reforms and rate rationalization.
Composite Leading Indicator for GVA-Manufacturing for India: A new Composite Leading Indicator (CLI) for GVA-Manufacturing was developed using machine learning models, effectively predicting manufacturing growth with a one-quarter lead for short-term monitoring and forecasting.
Decoding Safe Asset Volatility Amid Geopolitical Risks Using Neural Networks: The study analyzed the volatility of safe haven assets under geopolitical risks, finding crude oil most sensitive to shocks, gold most stable, and silver and US Treasuries showing intermediate behavior. Neural network models outperformed traditional econometric models in forecasting volatility.
What is the “Goldilocks Period” in the context of the Indian economy? A “Goldilocks Period” refers to an ideal economic state where the economy is neither “too hot” (high inflation) nor “too cold” (recession), but characterized by steady, robust growth and low, stable inflation. For India in H1:2025-26, this was evidenced by 8.0 per cent growth paired with 2.2 per cent average inflation.
Policy Relevance
The 25 bps rate cut signals the RBI’s transition from an inflation-centric focus to proactive growth support, utilizing the fiscal space created by historic disinflation. This move aims to sustain the 8.2 per cent growth momentum while managing potential external headwinds from global trade uncertainties and divergent international monetary policies.
Relevant Question for Policy Stakeholders: How will the RBI balance the need for growth-supportive rate cuts with the potential for sudden food price volatility or global capital flow reversals in 2026?
Follow the full news here: RBI Bulletin December 2025