India’s financial pulse is beating stronger than ever. After months of cautious optimism, the country’s banking sector has come alive with a surge of energy, driven by the twin forces of festive euphoria and bold tax reform. According to the most recent Reserve Bank of India (RBI) figures, bank credit was up by as much as 11.38% in the two weeks that ended on October 3, 2025, making this increase the most significant one over the last eight months by far.
The only situation of the credit flow still remaining in the doldrums has been overturned and replaced by a veritable tidal wave of economic propulsion. The decisive government measure that led to the turning point was not a matter of chance – it was the GST simplification that brought back the confidence of both consumers and businesses. The economy seems to be following the lighting pattern of the cities, and therefore the numbers are speaking of recovery, stamina, and renewed faith into India’s growth engine, besides of course shining homes.
A policy shift sparks momentum
The government’s call for GST price rationalization as from September 22, 2025, was not only a rectification of technical data – it was a declaration of the large-scale intentions. The abolition of the existing multi-rate structure of 5, 12, 18, and 28% by the adoption of a simple two-slab system, i.e., 5% and 18%, allowed the policymakers to remove the long-time hurdles. This wonder worked out well for the entrepreneurs as at the peak of a very challenging period they suddenly found it much easier not only to conduct business but also to make lawful declarations.
As a matter of fact, consumers who were on the sidelines and had postponed their purchases because of the expected new tax system, went on a spending spree the very day the revised rates were introduced, causing a momentum of sales to jump in from all quarters of the market, be it electronics, automobile, or retail.
Festive season demand lifts credit growth
The time, honestly, couldn’t have been any better. The booming festival period saw a bank loan issue turnover of Rs 192.66 lakh crore, which was Rs 172.98 lakh crore the previous year. On a two-week level, credit expansion stood at 1.92%, a signal of the Indian consumption momentum.
Retail and corporate customers were therefore the first to avail of better and more affordable credit offers, financing deals, and take advantage of the brighter business atmosphere. Financial corridors were illuminated by the festive glow as the new buzz of activity enlivened the desks of lending departments, hence giving quite a few people the feeling that the pre-pandemic economic vibrancy levels are reaching again.
Macro-economic tailwinds support growth
This credit revival is also accompanied by a very welcome declination of inflation. The Consumer Price Index (CPI) inflation rate fell to an eight-year low of 1.54% in September from 2.07 percent in August, thus providing more purchasing power to consumers.
Besides that, income tax reliefs announced in the Union Budget have been like a feather in the cap of the optimists/ The Bank of Baroda is right when pointing out that the irk by lower taxes that occurred in the first half of the fiscal year is now resulting in more spending, hence, reinforcing the effect of the festive surge and of the new GST framework.
Deposits keep pace with lending activity
Yes, banks had gone crazy with lending, but at the same time, they witnessed their deposits increase quite fast too. Compared to the 219.2 lakh crore of the previous year, deposits had already gone up 9.94% to 240.98 lakh crore. Such a simultaneous hike in deposits is a guarantee that credit expansion is not going to run out of steam and hence the financial system will stay liquid and resilient in the face of the growing economic activity.
India’s economic story this season reads like a comeback narrative — one of renewed confidence, timely reform, and the indomitable spirit of its people. The GST rationalization went beyond that by not only making the tax simpler but also by putting the flame of hope back in people’s hearts and hence setting the stage for a wider recovery. With inflation being at its historical lows accompanied by increasing incomes and consumer enthusiasm making its way into the markets, the country is standing right at the door of a strong financial resurgence.
Apart from that, the sparkling Diwali lights that are brightening the homes in every corner of the country are also symbolically putting a glow on the economy that has been rejuvenated — an economy that is rediscovering its rhythm, its momentum and its belief in the future being better or, simply, in a brighter tomorrow.
