India ‘s Q2 GDP’s stunning growth
By : Dr.Gowri Ramachandran
Chartered Wealth Manager and Economist
Chair person – Expert committee on Economic Affairs, Hindustan Chamber of Commerce,
India’s Economic Engine Reviving Up: Q2 GDP outpaced Q1 beating all Expectations. At 8.2%, India’s growth outpaced most major economies during the same period. China grew around 5%, while advanced economies such as the United States, the United Kingdom, and Japan trailed significantly behind. Against the IMF’s projected global growth rate of about 3–3.2% for 2025, India continues to expand at more than twice the global average and well above the advanced‑economy mean of around 1.5%.
The Union Budget 2025‑26 forecasts the Centre’s fiscal deficit at 4.4% of GDP for FY26, down from the revised estimate of 4.8% in FY25. As of April–October, the deficit stood at roughly 52.6% of the full‑year target (₹8.25 lakh crore), modestly higher than 46.5% during the same period last year. However, with GDP expanding strongly, analysts expect the government to stay broadly on course to meet the 4.4% target through expenditure rationalization and higher‑than‑budgeted non‑tax revenues, particularly from the RBI surplus.
Let’s decode how this is achieved..
India’s GDP expanded by 8.2% year-on-year in Q2 FY26, up from 5.6% in Q2 FY25 and higher than 7.8% in Q1 FY26 -marking a six‑quarter high and surpassing most market expectations of around 7.4%.
Following this robust performance, several analysts now project full‑year FY26 real GDP growth to be at or slightly above 7%, compared with earlier estimates in the mid‑6% range.
The key growth driver was manufacturing within the secondary sector, which recorded a strong 9.1% year-on-year increase in real GVA. Overall industry (the secondary sector) grew by 8.1%, while the services sector expanded by approximately 9.2%, supported by strong momentum in financial, real estate, and professional services, along with consumption-linked segments. Construction activity also rose by about 7.2%, driven by government capital expenditure on infrastructure and healthy demand for cement, steel, and related materials. It is to be noted that Government ‘s infrastructure spending is less in this quarter and similarly the GST 2.0 reforms has hardly ten days in this quarter . Next quarter Q3 can we expect still higher number ?
With growth momentum expected to persist in the coming quarters, it will be important to watch how GDP evolves over the remainder of FY26. Sustaining an annual real GDP growth rate of 8–10% remains essential for achieving the vision of a “Viksit Bharat” – a developed India by 2047.
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