India’s GDP growth outperforms expectations led by strong consumption, capital formation

India's economy outperformed expectations in Q2 FY26 as income tax cuts, GST rationalisation, an early festive season and easing inflation supported the acceleration of private final consumption expenditure (PFCE) to 7.9 per cent in the quarter, a report said on Monday.

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Despite some moderation, gross fixed capital formation grew at an encouraging rate of 7.3 per cent in Q2, supported by public capital expenditure, said the report from CareEdge Ratings.

It forecasted that growth momentum is expected to moderate to roughly 7 per cent in the second half of FY26 after averaging at about 8 per cent in the first half, estimating FY26 GDP growth at 7.5 per cent. The low base of the previous year and the low deflator also pushed up the GDP growth rate, the report said.