India GDP Q2 Growth Data Highlights: GDP growth shows strength of Indian economy, says FM Sitharaman

“The latest update on India’s strong Q2 GDP performance reinforces Moody’s view of a bullish long-term economic trajectory. The numbers point to robust domestic demand, supported by infrastructure expansion and buoyant exports. This momentum is particularly significant for the real estate and housing finance sector. As economic activity picks up and real incomes rise, more households become eligible for home loans, giving credit demand a required boost. Meanwhile, moderating inflation and expectations of a neutral-to-easy monetary policy shows positive support for modest interest rate reductions, which can translate into lower EMIs. For lenders, higher loan volumes and improved household balance sheets signal stable asset quality and a healthy, broad-based credit growth.
Lower rates, rising housing demand and supportive macroeconomic conditions create a win-win scenario for both borrowers and lenders, strengthening the sector’s outlook and aligning it with country’s sustainable long-term growth story,” says Atul Monga- CEO& Co-Founder, BASIC Home Loan.

Finance Minister Nirmala Sitharaman on Friday said the September quarter GDP print of 8.2 per cent shows that reforms and fiscal consolidation drove the Indian economy's robust growth and momentum. "Various high-frequency indicators also point to continued economic momentum and broad-based consumption growth," she said in a social media post.
"The GDP estimates released today shows the robust economic growth and momentum of the Indian economy. With a Real GDP growth rate of 8.2 per cent for Q2 - FY 2025-26 (July-Sept), India is the world’s fastest growing major economy," Sitharaman wrote on 'X'.

"Contrary to widespread forecasts, there are no signs of deceleration. However, data-related challenges remain prominent. A significant boost came from the GDP deflator, while discrepancies also played a major role, contributing as much as 3.3% of GDP.”

Interestingly, nominal discrepancy was negative (-2.9% of GDP), yet real discrepancy was positive and substantial. This warrants deeper analysis, but at first glance, identifying the specific growth drivers is difficult, especially given the stark contrast between GDP figures and signals from multiple high-frequency indicators,” says Kunal Kundu, India Economist at Society Generale.

"Nominal GDP growth at 8.7% in Q2 FY26 continued to reflect a relatively soft patch for the Indian economy. In contrast, on the back of a low deflator, real GDP growth at 8.2% continues to signal sustained underlying strength. Activity in the quarter was partly weighed down by nearly a month of subdued production and sales activity during the GST rate transition phase. Looking ahead, GDP growth is expected to print strongly again in Q3 FY26, supported by festive-season demand and pent-up consumption at the start of the quarter. Real GDP growth remains on track to average around 7.5% in FY2026,” says Suvodeep Rakshit, Chief Economist at Kotak Institutional Equities.

"Q2 FY26 growth at 8.2% was higher than the consensus. The growth on the supply side was driven by manufacturing, finance, business services, public administration and defence. On the demand side, growth was driven by consumption and investment demand. The impact of decline in inflation was evident in the nominal GDP growth of 8.7% in Q2 FY26. This makes fiscal arithmetic for FY26 difficult. Strong H1 FY26 growth has brightened the scope for high GDP growth in FY26,” says Devendra Pant, Chief Economist at India Ratings and Research.

"Going forward, the tariff impact is yet to play out as the front-loading effect fades. Moreover, what remains uncertain is whether the jump up in demand seen during the festive season would sustain over the coming months, especially given that urban hiring trends remain tentative. Given the strong Q2 GDP number, we see an upward bias to our GDP growth forecast for full year at 7.2%,” says Sakshi Gupta, Principal Economist at HDFC Bank.

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group says, “India’s real GDP growth for the quarter ending September 2025 came in at 8.2%, well above our projections and ahead of consensus estimates. Growth was broad-based on both GDP and GVA metrics. On the supply side, manufacturing and most service-sector categories registered strong expansion. Demand indicators echoed this trend, with private consumption and investment continuing to demonstrate healthy momentum.

It is important to note that in the GVA-based estimation method, real output is calculated by deflating nominal values. Exceptionally low wholesale price inflation during the period pushed the GDP deflator lower, which may have mechanically boosted real GDP and consequently the reported growth rate. Additionally, the statistical discrepancy component turned positive in Q2 FY26 compared with a negative print in the same quarter last year, further enlarging the GDP level and supporting the headline growth number.

Even after accounting for these technical factors, growth performance in Q2 FY26—and for the first half overall—has been materially stronger than anticipated. With real GDP expanding 8% in H1, full-year growth is now likely to exceed our earlier estimate of 7%, even if activity moderates slightly in the remainder of the year. India is set to retain its position as the fastest-growing major economy globally. Crucially, this period has been marked by high growth accompanied by muted inflation—an indication of the economy’s underlying resilience.

Despite robust growth and a benign inflation environment, we expect the Monetary Policy Committee of the Reserve Bank of India to deliver a 25 bps policy rate cut in the upcoming review. The prevailing macroeconomic configuration—strong output momentum, low inflation, and the prospect of monetary easing—continues to support a favourable outlook for Indian equities.”

The Indian economy registered an 8.2% year-on-year expansion in July-September, showing improvement from the previous quarter's 7.8% growth. Consumer spending and manufacturing sectors continued to be significant contributors, despite international trade challenges.

The growth surpassed expectations of economists surveyed by Reuters, who had predicted a 7.3% increase for the September-ending quarter. This period coincided with the United States' implementation of an additional 25% punitive duty on Indian exports, bringing the total tariff to 50%.

The Real GVA calculations for H1 of 2025-26 amount to ₹89.41 lakh crore, in contrast to ₹82.88 lakh crore in H1 of 2024-25, showing a 7.9% increase. Additionally, the Nominal GVA in H1 of 2025-26 is calculated at ₹155.94 lakh crore, versus ₹143.39 lakh crore in H1 of 2024-25, indicating an 8.8% growth.

During April-September of 2025-26 (H1 2025-26), estimates indicate that Real GDP, or GDP at Constant Prices, reached ₹96.52 lakh crore, compared to ₹89.35 lakh crore in H1 of 2024-25, demonstrating an increase of 8.0%. The Nominal GDP, or GDP at Current Prices, for H1 of 2025-26 stands at ₹171.30 lakh crore, up from ₹157.48 lakh crore in H1 of 2024-25, reflecting an 8.8% growth.

The Real GVA estimates for Q2 of FY 2025-26 stand at ₹44.77 lakh crore, as opposed to ₹41.41 lakh crore in Q2 of FY 2024-25, displaying an 8.1% growth. The Nominal GVA for Q2 of FY 2025-26 reaches ₹77.69 lakh crore, compared to ₹71.45 lakh crore in Q2 of FY 2024-25, indicating an 8.7% growth.

The Real GDP or GDP at Constant Prices for Q2 of FY 2025-26 shows an estimate of ₹48.63 lakh crore, compared to ₹44.94 lakh crore in Q2 of FY 2024-25, demonstrating an 8.2% growth. The Nominal GDP or GDP at Current Prices for Q2 of FY 2025-26 indicates an estimate of ₹85.25 lakh crore, in contrast to ₹78.40 lakh crore in Q2 of FY 2024-25, exhibiting an 8.7% growth.

Real Private Final Consumption Expenditure demonstrated improvement with 7.9% growth in Q2 of FY 2025-26, higher than the 6.4% recorded in the same period of the previous financial year. The first half (April-September) of FY 2025-26 saw Real GDP growth of 8.0%, marking an increase from 6.1% in H1 of FY 2024-25.

The Tertiary Sector maintained strong momentum, particularly in Financial, Real Estate & Professional Services, achieving 10.2% growth at Constant Prices in Q2 of FY 2025-26. However, Agriculture and Allied activities (3.5%) and Electricity, Gas, Water Supply and Other Utility Services (4.4%) experienced moderate Real growth rates.

The overall Real GDP growth surpassed 8.0% in Q2 of FY 2025-26, primarily driven by Secondary (8.1%) and Tertiary Sectors (9.2%). Within the Secondary Sector, Manufacturing and Construction displayed robust performance with growth rates of 9.1% and 7.2% respectively at Constant Prices.

Real GDP growth reached 8.2% in Q2 of FY 2025-26, showing improvement from 5.6% in Q2 of FY 2024-25. The nominal GDP exhibited an 8.7% increase in Q2 of FY 2025-26.

India’s real GDP for the second quarter of the current financial year (Q2 FY 2025-26) grew at 8.2%, according to government data released today.

The International Monetary Fund projects India's economic growth rate at 6.6 per cent for 2025-26, whilst observing that the implementation of GST reforms could help buffer the nation against the impacts of America's 50 per cent tariff impositions.

"India's economy has continued to perform well. Following the economic growth of 6.5 per cent in fiscal year 2024/25, real GDP expanded by 7.8 per cent in the first quarter of fiscal year 2025/26," stated the IMF following its Executive Board's annual assessment of India.

According to the IMF, India's aspirations to achieve advanced economy status can be realised through the implementation of comprehensive structural reforms that boost potential growth.

The organisation noted that robust growth is anticipated to continue, bolstered by positive domestic conditions, despite external challenges.

"Under the baseline assumption of prolonged 50 per cent US tariffs, real GDP is projected to grow at 6.6 per cent in FY2025/26 before moderating to 6.2 per cent in FY2026/27," the IMF reported.

V Anantha Nageswaran, Chief Economic Advisor, indicated on Tuesday that India's economy is projected to surpass $4 trillion during the current fiscal year. He emphasised that with geopolitical situations in a "huge state of flux", economic expansion remains crucial for maintaining India's position and influence globally.

Currently, India holds the position of the fifth largest economy globally, with its GDP approximately at $3.9 trillion.

At the IVCA Green Returns Summit 2025, Nageswaran noted that the Indian economy is presently approaching the USD 4 trillion threshold within this financial year, advancing from $3.9 trillion as recorded at the end of March 2025.

"So, whatever we do with respect to greening the economy, energy transition, environment, dealing with climate change and climate volatility have to be aligned with our priorities, both in the near term and the medium term", he stated.

Nageswaran acknowledged the country's understanding of global warming's potential impacts on agriculture, environment, and coastal regions.

He confirmed India's commitment to achieving net zero emissions by 2070.

Moody's Ratings announced on Friday that India will be at the forefront of economic expansion amongst emerging markets and the Asia Pacific region, projecting a GDP growth of 7 per cent in 2025, followed by 6.4 per cent in 2026.

The ratings agency highlighted India's economic resilience amidst global uncertainties, citing robust domestic growth drivers as the primary factor.

Despite the ongoing depreciation of the Indian rupee against the dollar, the agency noted that most rated organisations maintain effective currency risk management or substantial financial reserves, whilst investment-grade entities continue to successfully access international capital markets.

"India will lead growth among emerging markets and across the region, with GDP growing 7 per cent in 2025 and 6.4 per cent in 2026," Moody's Ratings said.

The agency forecasts that APAC's average GDP growth will maintain stability at 3.4 per cent in 2026, compared to 3.3 per cent in 2024 and an anticipated 3.6 per cent in 2025.

According to Moody's, emerging markets will be the primary driver of regional GDP growth on a weighted average basis, achieving an average growth of 5.6 per cent, whilst advanced markets are expected to grow at 1.3 per cent.

In its latest edition of the Economy Watch, EY says:

* India’s growth momentum remains strong with real GDP in 2Q 2025-26 projected above 7%.
* With the RBI forecasting 6.3% growth in 2HFY26, FY26 real GDP is expected to close at around 6.8% or slightly higher.
* Investment rate in real terms may need to be increased to 35% of GDP, a critical threshold to sustain 6.5%–7% medium-term growth.
* India continues to outpace global peers, emerging as one of the world’s fastest-growing large economies despite global uncertainty.
* Strong domestic demand, public investment and tech-led expansion are anchoring India’s growth resilience.
* EY highlights the need to accelerate technology adoption including AI, automation, advanced manufacturing and digital public infrastructure.
* Strengthening human capital through future-ready skills is essential to sustaining productivity-led growth.
* Greater private sector participation, especially in capital formation and R&D, will be key to long-term competitiveness.
* As India deepens its capabilities in green tech, defence, space and digital ecosystems, its position in the global economy will strengthen further.

The government's fiscal expenditure, which has been crucial for economic expansion in recent years, likely maintained its momentum in the second quarter of this financial year.

India continues to be amongst the fastest-expanding major economies globally, despite US President Donald Trump increasing tariffs on Indian products to 50% in August, a decision that has resulted in foreign investors withdrawing a net $16 billion from Indian equity markets this year.

The Indian economy probably grew at 7.3% during July-September, as indicated by a Reuters survey of economists, supported by robust agricultural sector spending and government expenditure, whilst private sector investment remained low.

Consumer spending, contributing approximately 60% of the economic activity, showed improvement in the previous quarter, driven by increased rural expenditure following better agricultural production.

However, urban consumption and private sector investments showed limited growth, indicating unbalanced development in India's position as the third-largest Asian economy, the survey said.

“Looking ahead, an above normal monsoon, good progress of kharif sowing and adequate reservoir levels have further brightened prospects of agriculture and rural demand. Buoyancy in services sector coupled with steady employment conditions are supportive of demand, which is expected to get a further boost from the rationalisation of GST. Rising capacity utilisation, conducive financial conditions, and improving domestic demand should continue to facilitate fixed investment. However, ongoing tariff and trade policy uncertainties will impact external demand. Prolonged geopolitical tensions and volatility in international financial markets caused by risk-off sentiments of investors pose downside risks to the growth outlook. The implementation of several growth-inducing structural reforms, including streamlining of GST are expected to offset some of the adverse effects of the external headwinds. Taking all these factors into account, real GDP growth for 2025-26 is now projected at 6.8 per cent, with Q2 at 7.0 per cent, Q3 at 6.4 per cent, and Q4 at 6.2 per cent. Real GDP growth for Q1:2026-27 is projected at 6.4 per cent. The risks are evenly balanced,” said RBI governor Sanjay Malhotra.