With the economic system rising at a better than anticipated tempo of 8.2% within the second quarter of the fiscal, expectations are that full 12 months GDP development could be at over 7%.
Official information launched on Friday confirmed that the Indian economic system grew at a six quarter excessive of 8.2% within the July to September 2025-26 from 7.8% within the first quarter of the fiscal and 5.6% within the second quarter of 2024-25. Sectors together with agriculture, manufacturing, public administration and different providers in addition to monetary providers, actual property {and professional} providers whereas a low base has additionally boosted development from a statistical perspective.
“The total 12 months outlook is now 7% or greater… Image seems one in all regular development into the third quarter,” mentioned Chief Financial Advisor V Anantha Nageswaran on Friday.
“The confluence of steady inflation, sustained public capex, and reform momentum positions the economic system to navigate dangers, as mirrored in upward revisions to FY26 GDP development projections by numerous companies,” he underlined, including that ongoing structural reforms together with the implementation of Labour Codes, GST price rationalisation, new Private Revenue Tax regime and deregulation initiatives proceed to reinforce effectivity and competitiveness.
The GDP estimates come at a time when the economic system is going through the brunt of the 50% US tariffs. Nevertheless, non-public consumption has remained sturdy and grew by 7.9% within the second quarter of the fiscal and it’s anticipated that even the third quarter will see sturdy development with the GST price cuts. Gross capital formation, which is a bellwether for investments additionally expanded by 7.3% within the second quarter, albeit at a slower tempo than 7.8% within the first quarter.
Devendra Kumar Pant, Chief Economist, India Rankings identified that the impression of the US tariff has began reflecting in exports development which grew 5.6% within the second quarter of the fiscal on per week base on 3.0% development in 2QFY25, however imports grew 12.8% in 2QFY26.
Most analysts count on the economic system to develop by 7.2% to 7.6% in FY26 however warning that the second half of the fiscal must be monitored as a result of impression of the US tariffs and are factoring in a 25 foundation level price reduce by the Financial Coverage Committee subsequent week.
“On the entire the economic system has performed properly with exports rising by 11% in Q2. Going ahead the headwind would be the tariff impression which is able to get starker in Oct-Nov. The tailwind is the GST push which might negate and transcend. This must be monitored going forward,” mentioned Madan Sabnavis, Chief Economist, Financial institution of Baroda. “Based mostly on conservative development for the second half however together with the GST impression on consumption we estimate development to be 7.4-7.6% for the complete 12 months,” he mentioned.
Pant of India Rankings mentioned the RBI might go for financial easing of 25 to 50 foundation factors in the remainder of FY26 to help nominal GDP development. “GDP development in FY26 might exceed Ind-Ra’s forecast of seven.0%,” he mentioned.
Analysts additionally famous that whereas low inflation has helped preserve costs low, it has impacted nominal GDP development and will upset the fiscal deficit goal of 4.4% of the GDP and tax assortment targets. Nominal GDP grew by 8.7% within the second quarter of FY26 and by 8.8% within the first half of the fiscal as towards the Finances estimate of 10.1%.
“Whereas the rise in actual GDP is encouraging, the slower nominal development ensuing from a major decline in inflation may have opposed implications. As an illustration, it complicates the achievement of tax targets, that are based mostly on a nominal development assumption of 10.1% for the present fiscal 12 months,” mentioned DK Joshi, Chief Economist, Crisil.
The Chief Financial Adviser nonetheless mentioned that the third and fourth quarter nominal GDP development can be greater as the bottom impact fades away and inflation can be greater. “We’re proper now in the midst of reviewing the estimates for FY26 and FY27 and we must always look ahead to that train fairly than speculating,” he additional mentioned.
