Newsletter
The Indian economy grew faster than expected, expanding at an annual rate of 8.2% in Q2 of FY 2025-26, adding yet another chapter to the country’s strong growth run.
Key numbers worth noting:
• Nominal GDP stood at 8.7%
• Agriculture rose 3.5% on an annual basis, lower than last year’s 4.1%
• Manufacturing surged 9.1%, a big jump from 2.2% last year
The how: this momentum was led by resilient rural demand and a healthy rise in government spending, even as private capital expenditure remained subdued and lagged behind the broader recovery.
Growth also picked up from the 7.8% seen in the previous quarter, helped partly by lower inflation, which made the real GDP figure look stronger.
A rebound in manufacturing and construction activity, paired with stronger domestic spending, added further fuel.
Bottomline: the IMF expects India’s GDP to grow 6.6% in FY 2026 and then slow slightly to 6.2% in FY 2027, assuming the US-India trade deal takes longer to finalise.
The IMF also praised the government for keeping growth strong while maintaining fiscal discipline, noting that domestic demand is still driving India’s economy despite global uncertainty.
