India's GDP Growth Hits 8.2% in Q2 FY26, Surpassing Estimates

India's economic growth accelerated significantly in the second quarter of the fiscal year 2025-26, with the country's real Gross Domestic Product (GDP) increasing by 8.2% from the same quarter last year. This growth, reported by the National Statistics Office (NSO), marks a notable rise from the 5.6% growth recorded during the corresponding period a year earlier and surpasses the 7.8% growth in the first quarter of this fiscal year. This performance represents the highest growth rate in six quarters and exceeded expectations set by economists.

Economic Sectors Contributing to Growth The boost in GDP is largely attributed to strong performances in the manufacturing and services sectors. Manufacturing saw a substantial increase of 9.1%, while the construction sector grew by 7.2%. The tertiary sector, encompassing services, expanded by 9.2%, driven primarily by a remarkable 10.2% growth in financial, real estate, and professional services.

Real GDP at constant prices reached ₹48.63 lakh crore during the July to September quarter, up from ₹44.94 lakh crore in the same quarter last year. The nominal GDP, which reflects market prices, also recorded a growth of 8.7%, rising to ₹85.25 lakh crore.

Prime Minister Narendra Modi described the growth figures as "very encouraging," attributing this success to the hard work and enterprise of the Indian people. He stated, "The 8.2% GDP growth reflects the impact of our pro-growth policies and reforms. Our government will continue to advance reforms and strengthen Ease of Living for every citizen." This sentiment underscores the government's confidence in its economic strategies as India navigates various challenges, including trade tensions with the United States.

Consumer Spending and Agricultural Performance Private consumption, a significant driver of the Indian economy, also showed healthy growth. The Real Private Final Consumption Expenditure (PFCE) increased by 7.9% in Q2, compared to 6.4% during the same period last year, indicating steady demand despite challenging weather conditions. However, the agricultural sector lagged, posting a modest growth of only 3.5%. Utility services such as electricity, gas, and water supply experienced a growth of 4.4%, reflecting a slower pace compared to other sectors.

Overall, the first half of FY26 has achieved an average GDP growth rate of 8%, a marked increase from 6.1% in the first half of the previous fiscal year. The growth in Gross Value Added (GVA), which measures the value of goods and services produced, was recorded at 8.1% in Q2, reflecting widespread expansion across key industries.

Future Projections and Economic Context The robust growth in Q2 reinforces India's position as the fastest-growing major economy globally, with policymakers carefully monitoring inflation and global demand conditions. Chief Economic Adviser V. Anantha Nageswaran indicated that full-year GDP growth is likely to exceed 7%, bolstered by a combination of stable inflation, increased public capital expenditure, and ongoing reforms. He reported, "The first half of the financial year has recorded a real GDP growth rate of 8%. Now we can state comfortably that the full year growth will be either 7% or to the north of that."

Despite the positive outlook, external pressures, including tariffs imposed by the United States, pose challenges to India's trade dynamics. Economists have noted that while the tariffs have not yet significantly impacted GDP, their full effects may become apparent in the coming quarters, especially if an India-U.S. trade agreement is not reached.

In conclusion, India’s economic indicators reflect a resilient growth trajectory, driven by robust domestic demand and structural reforms. As the nation aims to become the third-largest economy in nominal terms, sustaining this growth amidst global uncertainties will be crucial.