New Delhi (Rajeev Sharma): India’s economic engine picked up speed in the July–September quarter, logging an 8.2% expansion—its fastest pace in a year and a half—driven largely by a sharp rebound in factory output and a buoyant services industry. The latest figures from the National Statistics Office (NSO) show that the country has strengthened its position as the world’s quickest-growing major economy, far outpacing China’s 4.8% growth during the same period.
The second-quarter performance marks a step up from the 7.8% growth recorded in the previous three months and a sizable leap from the 5.6% seen a year earlier. The last time the economy grew faster was in the January–March quarter of FY24, when it touched 8.4%.
Manufacturing Fires Up Ahead of Festive Demand
A revival in industrial activity was central to the latest surge. Manufacturing expanded by 9.1%, a dramatic improvement over the 2.2% growth seen in the same quarter last year. Industry observers attribute the momentum in part to companies ramping up production after the government’s announcement of a GST rate cut, which took effect on September 22. With the festive season approaching, firms moved quickly to stock up, boosting overall output.
The services sector—ranging from finance to real estate—also posted an impressive 10.2% growth rate, up from 7.2% a year earlier. Agriculture, however, was a weaker spot, easing to 3.5% growth compared to 4.1% previously.
Economists Note Surprise Upside, Caution on Risks Ahead
Economists were taken aback by the scale of the improvement. Aditi Nayar, Chief Economist at Icra, said the numbers had “far exceeded” market expectations, noting that discrepancies in the data also contributed to the final figure. She warned, however, that a softer global environment, potential fallout from U.S. tariff actions, and tighter space for government capital expenditure could temper growth later in the year.
Despite those caveats, Nayar said the first-half performance—8% overall—positions the country to exceed the Economic Survey’s annual growth projection of 6.3–6.8%. She also pointed out that with quarterly growth crossing the 8% threshold, the likelihood of a rate cut by the Reserve Bank of India in December has diminished, even though inflation recently hit a multi-year low.
NSO Data Points to Strong First-Half Momentum
According to the NSO, real GDP for Q2 stood at ₹48.63 lakh crore, compared with ₹44.94 lakh crore in the year-ago period. In nominal terms, output increased 8.7% to ₹85.25 lakh crore. For the first half of the fiscal year, real GDP was estimated at ₹96.52 lakh crore, an 8% rise over the previous year, while nominal GDP climbed 8.8% to ₹171.30 lakh crore.
Private consumption also showed renewed life, growing 7.9% in the quarter versus 6.4% last year. Investment, measured through Gross Fixed Capital Formation, expanded 7.3%. One notable development was a sharp increase in statistical discrepancies, which reached ₹1.62 lakh crore—a factor economists say likely added some buoyancy to the headline figure.
Industry Analysts Expect Upward Revision to Growth Estimates
Rumki Majumdar, Economist at Deloitte India, said the results were stronger than anticipated and that the ongoing festive season, combined with the momentum from the new GST structure, may push third-quarter activity even higher. She noted, however, that the GDP deflator has dropped to its lowest point since 2019, which could complicate the government’s fiscal math, particularly for deficit and debt calculations tied to nominal GDP.
With the Reserve Bank of India already revising its full-year growth forecast upward to 6.8% in October, analysts now believe further upgrades may be on the horizon—provided global uncertainties do not disrupt the current momentum.
