Economic policies, market trends, and financial developments
After back-to-back good monsoons in 2024 and 2025, India is facing a surplus in key crops like rice, wheat, and soyabean, leading to wholesale prices dropping well below the minimum support prices (MSP). This has reversed the earlier focus on curbing high food inflation that hurt consumers, now putting pressure on farmers with low returns, prompting potential policy changes to support the farm sector.
India and Brazil have agreed to expand the existing Preferential Trade Agreement between India and the MERCOSUR trading bloc, which includes Brazil, Argentina, Uruguay, and Paraguay. This decision came during a meeting in New Delhi between Commerce Minister Piyush Goyal and Brazilian Vice President Geraldo Alckmin, aiming to increase trade volumes and reduce barriers amid growing economic partnerships.
RBI Governor Sanjay Malhotra spoke at the annual meeting of the IMF and World Bank in Washington DC, where he called on other central banks to focus on Central Bank Digital Currencies (CBDCs) instead of stablecoins for handling payments across borders. This comes as more countries are accepting stablecoins, and it shows India's push for safer digital money options that protect national control over currency, especially when private cryptos could affect economic policies.
China has expanded its export controls on rare earth elements and technologies, adding five more elements to its restricted list effective October 9, 2025, amid escalating US-China trade tensions. This move has prompted US Treasury Secretary Scott Bessent to call for support from allies like India against China's actions, potentially accelerating stalled India-US trade negotiations as Indian officials visit Washington this week to address the 50% tariffs imposed on Indian exports due to Russian oil imports, highlighting shared concerns over critical minerals supply chains.
The Trump administration's 50% tariffs imposed in August 2025 led to a 12% sharp decline in India's merchandise exports to the US in September, but overall exports grew 6.74% to $36.38 billion, mainly driven by growth to China and UAE, while a surge in gold, silver, and fertilizer imports pushed the trade deficit to a one-year high of $31.15 billion, highlighting global trade challenges and India's diversification strategy.
The Reserve Bank of India released the minutes of its Monetary Policy Committee meeting held between September 19 and October 1, 2025, where the panel unanimously decided to keep the repo rate unchanged at 5.5% for the second straight time, emphasizing caution due to global trade uncertainties like US tariffs, while lowering inflation forecasts and raising GDP growth estimates to support India's economic stability.
China has recently tightened export controls on rare earth technologies and materials, adding more elements to its restricted list amid rising tensions with the US over tariffs. This move has disrupted global supply chains for key technologies like electric vehicles and wind turbines, prompting India to plan a national stockpile of rare earth elements to protect its growing needs in clean energy and manufacturing sectors.
The Centre is pushing for the Reserve Bank of India (RBI) to oversee two key state-owned institutionsтАФthe Employees' Provident Fund Organisation (EPFO) and the Post Office Savings Bank (POSB)тАФfollowing a Rs 96 crore fraud in POSB and growing concerns over the management of massive social security funds. This move aims to strengthen regulatory controls and improve governance in these critical entities handling trillions in public savings.
The International Monetary Fund (IMF) has issued a caution in its latest World Economic Outlook update, drawing similarities between the current boom in Artificial Intelligence (AI) investments and the dot-com bubble of the late 1990s, warning that unmet expectations could lead to sharp market corrections. This comes as global tech giants like Google announce massive AI investments, including a $15 billion commitment to build an AI data centre in India's Andhra Pradesh, underscoring the rapid influx of capital into AI and its potential implications for economic stability worldwide, including in emerging markets like India.
China has ramped up its crude oil stockpiling, adding nearly 160 million barrels worth over $10 billion to its reserves in the first nine months of 2025, driven by low global prices and expanding storage capacity. This move, amid ongoing US-China trade tensions and risks of tighter sanctions on key suppliers like Russia and Iran, highlights Beijing's focus on energy security, influencing global oil markets by absorbing excess supply and keeping prices stable.
The Employees' Provident Fund Organisation (EPFO) has introduced significant reforms to make partial withdrawals easier for its over 30 crore members, as approved in the 238th meeting of the Central Board of Trustees on October 13, 2025. These changes merge complex rules into three simple categories, allow up to 100% withdrawal of eligible balance while requiring a 25% minimum contribution balance, and reduce minimum service periods, aiming to enhance financial flexibility without compromising long-term retirement security.
US President Donald Trump recently moderated his threats of imposing 100% tariffs on Chinese goods after a sharp drop in American stock markets, while China firmly stated it would not back down and would fight to protect its interests. This development, following China's new controls on rare earth exports, exposes the limits of using tariffs to fix trade imbalances and provides important hints for India, which is dealing with US tariffs up to 50% on its goods and additional penalties for importing Russian oil, pushing New Delhi toward reforms and stronger ties with Asian economies.