Daijiworld Media Network – New Delhi
New Delhi, Nov 28: India’s growth engine delivered a strong surge in Q2 of FY25, with real GDP expanding by 8.2% — sharply higher than the 5.6% recorded a year ago and well above RBI and market expectations. For the first half of FY26, growth stood at a robust 8%, signalling a resilient economy powered by rising consumption, investments, and front-loaded production ahead of steep US tariffs.
Economists, however, warn that the second half of the fiscal may see softer momentum due to a high base effect, the drag from US tariffs, and slowing private investments amid global uncertainty. Analysts have already trimmed projections for Q3 and Q4 to 6.5% and 6.3%.
The IMF has also lowered its full-year FY26 forecast to 6.6%, citing weaker global trade and tariff impacts, though the RBI and the government have retained their estimates in the 6.3%–6.8% range. The Centre maintains that strong demand, steady public spending and easing inflation will keep India’s growth on track, aided by the favourable impact of recent GST rate rationalisation.
But risks persist. Shifting global trade policies, geopolitical tensions and financial volatility could hurt exports, investor sentiment and capital flows, slowing India’s march toward becoming the world’s third-largest economy. The IMF even noted that the $5 trillion target may be delayed due to a weakening rupee.
Private consumption and investments — the twin drivers of growth — showed mixed trends. Consumption grew a healthy 7.9% in Q2, but investments moderated slightly to 7.3%, from 7.8% in Q1. The IMF flagged private investment as “uneven and sluggish”, noting that growth is still largely supported by government capital spending, which has surged 40% so far this fiscal. However, in Q2, government expenditure unexpectedly contracted by 2.7%.
According to National Statistics Office data released Friday, real GVA rose 8.1% in Q2 (5.8% last year), and 7.9% during the first half of FY26. Real GDP at constant prices was estimated at ?48.62 lakh crore in Q2, up from ?44.94 lakh crore last year, while H1 stood at ?96.52 lakh crore versus ?89.35 lakh crore a year ago.
On the supply side, agriculture, services and industry all contributed to growth. Manufacturing and services were standout performers. The primary sector grew 3.1% in Q2, slightly lower than last year, while mining showed marginal improvement.
Agriculture and allied sectors registered 3.5% growth, while mining decelerated slightly. For H1, agriculture bounced back to 3.6% from 2.7% last year, boosted by strong manufacturing (8.4%) and services (9.3%). Mining remained the lone laggard, contracting 1.8%.
Industrial growth improved to 7.6% in H1, driven by manufacturing, electricity and construction. Manufacturing contributed the most at 8.4%, followed by construction at 7.4%, though utilities slowed to 2.4%.
The services sector maintained strong momentum at 9.3%, led by trade, hotels, transport, communication, financial services and public administration.
On the expenditure front, private consumption — which makes up 56% of GDP — remained solid, growing 7.9% in Q2. Government expenditure, however, shrank in Q2. Private investments were stable at 7.3%, slightly lower than Q1 but higher than last year.
Despite the impressive first half, economists caution that the coming quarters may not carry the same sparkle — but India’s growth story remains steady, even if tempered by global headwinds.