Page 15 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

• Transport & Communication: Year-on-year Transport & communication inflation rate for the
month of November, 2025 is 0.88% (Provisional). Corresponding inflation rate for the month of
October, 2025 was 0.94%. It is combined inflation rate for both rural and urban sector.

• Fuel & light: Year-on-year Fuel & light inflation rate for the month of November, 2025 is 2.32%
(Provisional). Corresponding inflation rate for the month of October, 2025 was 1.98%. It is
combined inflation rate for both rural and urban sector.

Monetary stance on inflation

The Reserve Bank of India (RBI) cut the repo rate by 25bp to 5.25% and announced liquidity measures,
including open market bond purchases and FX swaps. The RBI announced open market purchases of
government securities worth INR 1 trillion this month and USD/INR buy-sell swap auctions totalling USD
5 billion to inject liquidity into the system.

The RBI maintained a neutral policy stance, noting that CPI inflation has eased significantly, remaining
below the lower bound of its target range. While inflation is expected to pick up, it should stay under 4%
– the RBI’s baseline inflation target – for the first half of next year.

Manufacturing PMI – India

• India's private sector business activity showed robust growth in December, although the pace slightly
slowed from November. The HSBC India Composite PMI fell to 58.9 from 59.7, marking the softest
output growth since February.

• Both manufacturing and services sectors experienced this slowdown, primarily due to a softer rise in
new orders, though demand remained strong. Business confidence dipped, but companies remain
optimistic about future growth.

• A reading above 50 indicates economic expansion, while one below 50 shows contraction in the
manufacturing, services, or construction sectors. A reading of exactly 50 signifies no change.

India’s external position

India’s forex reserves
• India’s forex reserves were up by $4.36 billion to $693.32 billion for the week ending December

19, according to data released by the Reserve Bank of India (RBI).

• For the week ended December 19, foreign currency assets, a major component of the reserves,
increased by $1.64 billion to $559.42 billion.

• Value of the gold reserves increased by $2.62 billion to $110.36 billion during the week.

• The Special Drawing Rights (SDRs) were up by $8 million to $ 18.74 billion.

• India's reserve position with the IMF was up by $95 million to $4.78 billion in the week, according
to the RBI data.

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