Q2 economic growth may have surpassed RBI's 7% projection

Led by a revival in consumption demand, an above-normal monsoon that propped up agriculture, robust industrial growth, and sustained public capex, the Indian economy is expected to have sustained the growth momentum in the July-September quarter (Q2) with a gross domestic product (GDP) growth uptick to over 7 per cent, after the 7.8 per cent growth recorded in Q1, economists reckon.

- SHIVA RAJORA

The National Statistics Office (NSO) is expected to release the quarterly growth estimates for Q2 on November 28.

In its bimonthly monetary policy review that concluded on October 1, the Reserve Bank of India (RBI) had raised its GDP growth estimate for Q2 to 7 per cent from 6.7 per cent projected earlier, noting that domestic economic activity has continued to 'sustain momentum' in the September quarter.

Favourable base effects and the low deflator growth which boosted the headline growth number in Q1, are likely to have persisted through Q2, most economists believe.

The impact of steep US tariffs on Indian goods, which increased to 50 per cent from August 27, was not fully felt in Q2, even though front-loading of US shipments by domestic producers occurred at a slower pace than in Q1. Moreover, the impact of the goods and services tax (GST) rate rejig that kicked in on September 22, may not be too tangible in the Q2 print even as the indirect tax reform may have triggered a deferral of buying decisions before the revised rates came into effect. IDFC Bank Chief Economist Gaura Sengupta, who pegged GDP growth in Q2 at 7.3 per cent, pointed to the recovery in rural indicators becoming more broad-based in Q2 FY26 with a pickup in two-wheeler and tractor sales.

More encouraging, she said, was the sustained decline for demand for jobs under the MGNREGA over July to October as it indicates job creation in rural areas.