Authors : Nikunj Jamwecha; Rutuja Shende; Chirag Jaju; Adish Jain

Volume/Issue : Volume 10 - 2025, Issue 12 - December

Google Scholar : https://tinyurl.com/3hzcaubs

Scribd : https://tinyurl.com/45fcz6v9

DOI : https://doi.org/10.38124/ijisrt/25dec1171

Note : A published paper may take 4-5 working days from the publication date to appear in PlumX Metrics, Semantic Scholar, and ResearchGate.

Abstract : This study examines how changes in India’s policy repo rate affect the macroeconomy and various business sectors up to December 2025. The analysis uses recent data from RBI, government sources, IMF, and research reports. We review India’s monetary policy cycle – sharp rate hikes in 2022-23 followed by significant easing in 2025 – and assess transmission through interest rates, credit, and asset markets. Our sectoral analysis covers MSMEs, real estate/construction, banking and NBFCs, consumer goods and consumption, and manufacturing. We find that by late 2025, inflation had fallen well below RBI’s target band (≈2% vs 4% target), allowing cumulative repo cuts of 125 basis points since Feb 2025. These cuts lowered borrowing costs, expanded credit (MSMEs +12% YoY), and supported demand in housing and consumer durables. However, transmission remains incomplete due to factors like sticky deposit rates and fiscal impulses, prompting policy actions (e.g. linking MSME loans to external benchmarks. We present comparative tables of policy decisions and macro indicators, and charts illustrating inflation and growth trends. Our findings show that while policy easing in 2025 helped sustain high GDP growth (7–8% YoY), sectoral impacts vary: housing demand and rural consumption benefited strongly, manufacturing saw modest gains, and banks/NBFCs faced margin pressure despite robust loan growth. The paper concludes that continued monitoring of transmission channels is vital, especially as India pursues balanced growth and price stability.

References :

1. Reserve Bank of India – Monetary Policy Statement (October 2025): Repo rate unchanged at 5.50%. pib.gov.in
2. Press Information Bureau, Government of India – Economic Survey 2024–25 (Jan 2025): Credit growth, NPAs, CPI data. pib.gov.inpib.gov.in
3. Reserve Bank of India – Monetary Policy Statement (April 6, 2025): Repo rate cut by 25 bps to 6.00%. pib.gov.in
4. Reserve Bank of India – Press Note (June 6, 2025): Repo rate cut by 50 bps to 5.50%. pib.gov.in
5. Nikunj Ohri (Reuters) – “India’s inflation tanks to record low, boosting December rate-cut hopes” (Nov 12, 2025): CPI 0.25% in Oct. reuters.comreuters.com
6. Economic Times (PTI) – “Banks advised to link MSME loans to external benchmark by RBI: Govt” (Dec 14, 2025): External benchmark for MSME loans to improve transmission. economictimes.indiatimes.com
7. International Monetary Fund – Press Release 25/392 (Nov 26, 2025): India Article IV consultation; notes 7.8% GDP growth in Q1 FY26. imf.orgimf.org
8. RBI Bulletin (Oct 2024) – Patra et al.: Effects of 2022–23 policy tightening on inflation/demand. researchgate.net
9. Bank for International Settlements (BIS) Working Paper No.157 (2022): “Monetary policy and heterogeneities – India”: channels and asymmetries of transmission. bis.orgbis.org
10. EY – Private Credit in India: H1 2025 Update (Aug 2025): Data on sectoral bank credit growth. ey.comey.comey.com
11. ICRA Research (Dec 2025): Comments on Oct 2025 policy – transmission of prior cuts crucial. icra.in
12. RBI/Public Disclosures and other sources as cited above.