Manufacturing muscle lifts Q2 GDP growth to 6-qtr high of 8.2%

Private consumption gathers pace; services sector shines too. FY26 estimates to be revised upwards after faster than expected expansion

- ASIT RANJAN MISHRA

India’s economy expanded at its fastest pace in six quarters, growing 8.2 per cent during the July-September period of FY26, outstripping both official and private forecasts by a signifiant margin.

Data released by the statistics ministry on Friday showed that while a low base and a soft deflator lifted headline gross domestic product (GDP) growth, the real standout was manufacturing. The sector grew 9.1 per cent in Q2, emerging as the main driver of growth despite concerns over the 50 per cent US tariff imposed on Indian goods during the quarter. Services sector also witnessed robust expansion at 9.2 per cent, while private consumption expenditure rose 7.9 percent.

Most economists had expected Q2 GDP expansion to fall within the 7-7.5 per cent range: the Reserve Bank of India (RBI) had projected 7 per cent.

Nominal GDP rose at a slower 8.7 per cent in the September quarter, compared with the finance ministry's full-year estimate of 10.1 per cent, due to lower retail and wholesale inflation. The gap between real and nominal growth is now the narrowest since the third quarter of FY20.

Any shortfall in nominal GDP growth over the full year could complicate efforts to meet tax collection targets and may force the government to rein in spending to stick to the FY26 fiscal deficit target of 4.4 per cent of GDP.