RBI Reduces Repo Rate to 5.25%, Boosts Economic Outlook
The Reserve Bank of India's Monetary Policy Committee (MPC) concluded its meeting on December 5, 2025, with a unanimous decision to cut the repo rate by 25 basis points (bps), bringing it down to 5.25%. This marks the fourth rate reduction in the current easing cycle, resulting in a cumulative 125 bps cut this year. The MPC maintained its 'neutral' policy stance, signaling a balanced approach to future monetary actions.
Alongside the rate cut, the RBI revised its economic projections for FY26, raising the real GDP growth forecast to 7.3% from an earlier 6.8%. The Consumer Price Index (CPI) inflation forecast for FY26 was also lowered significantly to 2% from 2.6%. To ensure adequate liquidity in the banking system, the RBI announced Open Market Operations (OMO) purchases of Government Securities amounting to ā¹1 lakh crore and a 3-year USD/INR buy-sell swap of $5 billion. This move is expected to reduce borrowing costs for individuals and businesses, stimulate demand, and support overall economic activity.
Government Enhances Support for MSMEs and Artisans
In a bid to bolster the Micro, Small, and Medium Enterprises (MSME) sector, the Indian government has expanded financial support measures. A significant step includes increasing the guarantee ceiling under the Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE) from ā¹5 crore to ā¹10 crore. This initiative aims to improve access to collateral-free credit for small businesses.
Furthermore, the PM Vishwakarma scheme, launched in September 2023 to provide holistic support to artisans and craftspeople, continues to show robust progress. As of December 1, 2025, the scheme has registered 30 lakh beneficiaries, with 23.09 lakh currently undergoing training to enhance their skills. The scheme also facilitates digital payment adoption and market access for artisans through platforms like ONDC, FabIndia, Meesho, and the Government eMarketplace (GeM).
Legislative and Sectoral Policy Updates
The Lok Sabha passed the 'Health Security and National Security Cess Bill, 2025,' which proposes to levy a cess on the manufacture of pan masala and similar products. This measure aims to generate stable government revenue and discourage the consumption of harmful products, aligning fiscal policy with public health objectives.
In a move towards sustainable development, the Government of India approved ambitious Sustainable Aviation Fuel (SAF) blending targets for international flights: 1% by 2027, 2% by 2028, and 5% by 2030. Additionally, the Ministry of Heavy Industries organized a 'Chintan Shivir' focusing on "Alternate & Emerging Technologies in E-Motors" to foster innovation and strategic direction for India's sustainable mobility ecosystem.
Jal Jeevan Mission and Other Initiatives Show Progress
The Jal Jeevan Mission, launched in 2019 to provide tap water connections to every rural household, has successfully provided over 15 crore households with functional tap water connections. The Post Office Monthly Income Scheme (POMIS) 2025 was highlighted as a secure and predictable investment option, offering a 7.4% annual return paid monthly, beneficial for retirees and those seeking stable income.
India also opened the sixth application round under the Production Linked Incentive (PLI) scheme for bulk drug manufacturing, aiming to enhance domestic capacity for critical Active Pharmaceutical Ingredients (APIs) and reduce reliance on imports.
In a significant symbolic and administrative change, the Prime Minister's Office (PMO) complex was renamed 'Seva Teerth' to underscore a commitment to service-oriented governance. Similarly, residences of Governors and Lieutenant Governors were redesignated as Lok Bhavan and Lok Niwas.
Strengthening International Relations
Discussions between Prime Minister Narendra Modi and Russian President Vladimir Putin focused on expanding economic cooperation across various sectors, with a target of $100 billion in bilateral trade by 2030. India also announced new 30-day visa schemes for Russian tourists, aiming to boost people-to-people ties.