Slightly slower but GDP growth likely stayed strong in Q2

Growth in the Indian economy is expected to have maintained its momentum through the September quarter of 2025-26 (Q2FY26), even as the headline number may have slipped below the five-quarter high of 7.8 per cent recorded in the June quarter, according to economists.

- SHIVA RAJORA

A favourable base effect and subdued deflator growth, which lifted the Q1 figure, are thought to have persisted into Q2, though to a lesser extent. The impact of steep 50 per cent American tariffs did not fully materialise in the quarter, while front-loading of exports continued. An above-normal monsoon is also expected to have supported agricultural output and rural demand.

Gaura Sengupta, chief economist at IDFC Bank, said the "broad momentum" of the economy had continued into the second quarter, aided by several tailwinds. "In my estimate, it could very well be above 7 per cent," she said.

"Low deflator growth and base effects remained, though less pronounced. The full impact of tariffs will be visible only in subsequent quarters.

Listed companies' profits, supported by lower input costs in Q1, continued to benefit in Q2. Government capital expenditure, though saw some moderation, remained supportive to the capex cycle," she added.