Q2 stunner: Economic growth surges to 8.2%

MANUFACTURING EXPANDS AT FASTEST PACE IN OVER A YEAR REAL AND NOMINAL GROWTH RATES VARY JUST 0.5% POINT

- KULDEEP SINGH

INDIA'S GROSS DOMESTIC product (GDP) expanded at a six-quarter high rate of 8.2% in the July-September period (Q2FY26), beating all official and independent forecasts by a large margin.

The growth was fuelled by the robustness across primary, secondary and tertiary sectors.

Most analysts had estimated Q2 GDP growth within a range of 7-7.7%; the Reserve Bank of India's latest forecast was at the lower end of that band.

A notable jump in value creation in the manufacturing sector, resilient private consumption, a strong financial sector, a farm economy that maintained steady growth on a strong base were among the key drivers. Even the additional external headwinds caused by the 50% US tariff on most Indian goods could not slow the tempo much.

But the headline number was also aided in an unusual measure by an unduly low deflator-based inflation rate, and a favourable base (5.6%). The nominal GDP growth rate came the closest to the headline number, after the Q3FY20, at 8.7%. In Q1FY26 also, the difference between the real and nominal rates was narrow at just 1% point.

In Q1, real GDP growth of 7.8% was again significantly higher than the median of forecasts.