New Delhi [India], September 1 : Steady domestic consumption is expected to provide a strong boost to demand during the upcoming festive season, according to a report by Bank of Baroda.
The report highlighted that steady consumption trends point to a positive outlook for the economy in the months ahead.
It stated, "Steady domestic consumption so far (as reflected in GST collections) also provides a positive outlook for the upcoming festive demand."
GST collections rose by 10.7 per cent during April to July 2025, compared with 10.2 per cent growth in the same period last year.
According to the report, this steady rise indicates that domestic consumption remains robust. Improvement in consumer non-durables has already become visible, which suggests rising consumer activity.
The report added that as we advance, with rationalised GST rates, the manufacturing sector is also likely to receive a significant boost during the festive season.
On the industrial front, the Index of Industrial Production (IIP) showed a mixed performance. Growth in IIP stood at 3.5 per cent in July 2025, lower than the 5 per cent growth recorded in July 2024. However, it was an improvement compared with the 1.5 per cent growth registered in June 2025.
The report noted that the slower annual growth in July 2025 compared with the previous year was mainly due to weaker performance in mining and electricity production.
Despite this, manufacturing output provided a strong positive signal by accelerating to a six-month high in July 2025. Within the manufacturing sector, several major sub-sectors experienced strong growth compared to last year.
The report also noted that growth in infrastructure and construction goods reached a 21-month high, reflecting strong activity in investment-linked sectors. Consumer non-durables also performed well, signalling sustained household demand.
However, the report noted that not all segments performed equally well. Growth of primary goods continued to remain in the negative zone. In addition, consumer durables, intermediate goods, and capital goods recorded some moderation in growth compared with earlier periods.
In conclusion, the report outlined that the upcoming reduction in GST rates is expected to provide a substantial boost to sectors such as consumer durables and capital goods.
Combined with steady domestic demand and a revival in manufacturing activity, these factors are likely to support a strong economic momentum during the festive season.
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