India’s economy grew 8.2% in the second quarter of FY 2025–26, marking the strongest expansion in six quarters and significantly surpassing market expectations.
The Indian government said on Friday that the rebound was driven by robust manufacturing activity, stronger consumption and favourable statistical effects.
Real GDP in the July–September period rose to ₹48.63 lakh crore from ₹44.94 lakh crore a year earlier, registering growth of 8.2%.
Nominal GDP climbed 8.7% to ₹85.25 lakh crore, compared with ₹78.40 lakh crore in the same quarter of FY 2024–25.
For the first half of FY 2025–26, real GDP expanded 8.0% to ₹96.52 lakh crore, up from ₹89.35 lakh crore a year ago.
Real GDP growth in H1 compares with 6.1% in the first half of the previous fiscal year.
Nominal GDP for the period increased 8.8% to ₹171.30 lakh crore.
Growth beats RBI and market expectations
The 8.2% expansion marks an acceleration from 7.8% in the April–June quarter, when a lower GDP deflator boosted real growth unexpectedly.
Economists had forecast Q2 growth between 7% and 7.7%, while the Reserve Bank of India projected 7%.
The latest figure also stands well above the 7.3% consensus estimate.
The sharp outperformance was aided by a low base, softer inflation and favourable deflator effects.
Growth had slowed to 5.6% in the same quarter last year, making the year-on-year comparison more supportive.
The economy grew 7.8% in Q1 FY26 and 7.4% in Q4 FY25.
The upside surprise comes at a time when policymakers were already navigating tariff-related uncertainties and uneven global demand.
The strength in Q2 reinforces the view that domestic drivers — particularly manufacturing and consumption — remain resilient.
Strong data complicates RBI’s December policy path
The RBI has forecast full-year GDP growth of 6.8%, with expectations of 6.4% for Q3 and 6.2% for Q4.
The unexpected Q2 strength could push the central bank to revise its annual forecast upward at the upcoming Monetary Policy Committee meeting, scheduled for December 3–5.
However, the data may also make it harder for the RBI to justify a rate cut in December.
Growth has now exceeded the RBI’s own projection by more than one percentage point, signalling underlying momentum even as economists widely anticipate a 25-basis-point easing.
The central bank will announce its policy decision on December 5 in Mumbai.
With growth sharply outperforming expectations and inflation pressures moderating, the RBI faces a more complex balancing act between supporting economic activity and maintaining price stability.
India’s latest GDP reading positions it firmly among the world’s fastest-growing major economies, with the second quarter marking a clear sign of resilience despite global uncertainties.
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