India’s economy has expanded at its quickest pace in six quarters, posting a growth of 8.2 per cent and surpassing most forecasts in a sign of the domestic economy’s resilience amid the global tariff turbulence.
The July-September quarter’s headline figure was buoyed by a manufacturing rebound as producers ramped up output ahead of the festive-season consumption surge, offsetting softer agricultural performance. This quarter’s growth — compared with 7.8 per cent in the first quarter and 5.6 per cent in the same period last fiscal — was also backed by a robust services-sector performance.
Private consumer spending, which accounts for around 57 per cent of the GDP, rose 7.9 per cent year-on-year in the second quarter, up from the 7 per cent growth in the first quarter, according to data released on Friday by the statistics and programme implementation ministry.
Soon afterwards, Prime Minister Narendra Modi took to X, calling the data “very encouraging”. He said the growth reflected the impact of the government’s pro-growth policies and reforms.
“Our government will continue to advance reforms and strengthen the ease of living for every citizen,” Modi said.
With robust data for the first six months of the fiscal year, India’s economy is now projected to grow at 7 per cent for the financial year ending March 31, 2026, up from the previous estimate of 6.3-6.8 per cent, according to chief economic adviser Anantha V. Nageswaran.
He described the GDP numbers as exceeding the most optimistic projections, and said that supply-side investments in infrastructure, made since 2014, were now paying off.
Nageswaran expressed the hope that the economy would maintain its fast pace even in the third quarter, with urban demand — previously a concern — showing good traction following GST rate cuts, while rural demand remained buoyant.
Opp doubt data
Amid the chest-thumping by ruling party officials, Congress leader Jairam Ramesh questioned the veracity of the numbers. “It is ironic that the quarterly GDP numbers have been released very soon after an IMF report gave the second-lowest grade of C to India’s national accounts statistics,” he posted on X.
The International Monetary Fund (IMF)’s November country report noted that India’s national accounts data contain “some methodological weaknesses” that “somewhat hamper surveillance”.
Ramesh also highlighted a puzzling discrepancy. “The unrealistically low GDP deflator — which implies an inflation rate of only 0.5% — is at complete variance with the experiences of crores of households burdened by crushing price rise in their items of daily consumption,” he said.
Commenting on the GDP details, Aditi Nayar, chief economist at the ICRA, noted that India’s growth had “significantly surpassed expectations” in contrast to “widespread market expectation of some moderation”.
She found the 9.7 per cent surge in public administration, defence and other services “quite surprising” given that the Centre’s non-interest revenue expenditure had contracted sharply by 11.2 per cent year-on-year in the quarter, compared with the 6.9 per cent growth in the first quarter.
The combined non-interest revenue expenditure of 22 state governments has also halved to a 5.3 per cent growth from 10.9 per cent in the previous quarter.
“This suggests that other services — which include segments like health, education, recreation and personal services — are likely to have outperformed in the quarter,” Nayar said.
Rumki Majumdar, economist at Deloitte India, noted that manufacturing (9.1 per cent) and construction (7.2 per cent) had delivered stronger-than-expected performances despite monsoon-related disruptions. “Government capex has been strong at 55.2 per cent of the target for this fiscal year,” she observed.
RBI rate impact
The strong growth figures will likely postpone interest rate cuts. Both Majumdar and Nayar said the Reserve Bank may not lower its benchmark lending rate at next week’s monetary policy meeting, despite RBI governor Sanjay Malhotra having indicated on Monday that there was room for a rate cut.