Economic growth is seen to have moderated sequentially in the second quarter of the fiscal but is estimated to have still grown at a robust 7% plus. Most analysts estimate GDP growth in the range of 7% to 7.5% in the July to September 2025 quarter, as against a stellar 7.8% expansion in the first quarter of the fiscal year.
Official estimates of national accounts for the second quarter of the fiscal year will be released by the government on November 28. Significantly, this will be one of the last sets of data released before the meeting of the Monetary Policy Committee of the Reserve Bank of India from December 3 to 5.
The Reserve Bank of India has estimated GDP growth in the second quarter at 7.5% and at 6.8% for the full fiscal 2025-26. It could possibly revise the FY26 growth estimate in the upcoming policy as the cuts of the goods and services tax play out. The Indian economy had grown at 5.6% in the second quarter of 2024-25.
Analysts believe that while private consumption remained steady in the second quarter of this fiscal year, exports were a drag due to the impact of the US tariffs.
India Ratings and Research has estimated GDP growth at a robust 7.2% year-on-year during the second quarter of the fiscal year. “From the demand side, private consumption is a leading growth driver due to steady real income growth both in upper- and lower-income households. The resilient services sector, along with the favourable base-led goods exports growth in the manufacturing sector, propelled GDP growth from the supply side during 2QFY26,” said Paras Jasrai, Economist and Associate Director, India Ratings and Research. The economy has navigated the treacherous waters better than expected due to strong domestic demand.
ICRA has projected the year-on-year GDP expansion to ease to 7% in the second quarter of the fiscal year. It has also estimated the growth in gross value added to record a narrower dip to 7.1% from 7.6%, respectively. Lower expansion in the services sector (to +7.4% in Q2 FY2026 from +9.3% in Q1 FY2026), and agriculture (to +3.5% from +3.7%), is likely to outweigh a pick-up in the performance of the industrial sector (to a five-quarter high +7.8% from +6.3%), it said.
Aditi Nayar, Chief Economist, Head-Research and Outreach, ICRA, said: “A lower YoY rise in Government spending is likely to weigh on the pace of the GDP and GVA growth in Q2 FY2026 compared to Q1 FY2026. However, inventory stocking related to the early onset of the festive season, enhanced by the GST-rationalisation induced volume pick-up, and upfronting of exports to the US ahead of the tariffs, are expected to boost the performance of the manufacturing sector, and help industry GVA growth outpace that of the services after a gap of four quarters.”
An SBI Research has forecast GDP growth at 7.5% to 8% in the second quarter of the fiscal year. “India’s macroeconomic outlook remains one of cautious optimism, underpinned by robust domestic demand and easing inflationary pressures. Growth is being supported by strong investment activities, recovery in rural consumption, and buoyancy in services and manufacturing,” it said, noting that GST 2.0 reforms are expected to boost private consumption and domestic demand.
