India's economic resilience has been strongly affirmed by the July-September quarter GDP growth of 8.2%, exceeding expectations and marking a six-quarter high. This robust growth, as revealed by recent data, has prompted experts to revise their forecasts and acknowledge the underlying strength of the Indian economy.
The 8.2% GDP growth significantly surpasses the 5.6% growth recorded in the same period last year, showcasing a notable acceleration. This figure has exceeded most forecasts, which ranged between 7% and 7.5%. The robust numbers have been attributed to various factors, including strong domestic demand, a thriving manufacturing and construction sector, and broad-based sectoral strength.
Several economists and analysts have weighed in on the encouraging GDP data. Kirit Parikh, a noted economist, described the growth as "certainly, a very good achievement, and we should continue". He pointed to structural reforms, infrastructure investments, and improved connectivity as key drivers behind the strong performance, noting that the benefits of these long-term measures are now beginning to materialize.
The manufacturing sector has been a major contributor to the GDP surge, with a GVA increase of 9.1% in Q2, the fastest in six quarters. This reflects higher industrial output, improved capacity utilization, and resilient demand. The service sector also played a crucial role, expanding by over 9% for the second consecutive quarter, driven primarily by financial, real estate, and professional services. Even the agriculture sector showed mild improvement, with a 3.5% GVA growth, supported by stable food inflation.
On the demand side, private consumption has strengthened, growing by 7.9%, up from 7% in the previous quarter. Lower food inflation, GST rationalization, moderation in interest rates, and overall improvement in consumer sentiment have boosted spending.
The government has also played a significant role through pro-growth reforms, elevated public investment, and support for services activity. Finance Minister Nirmala Sitharaman stated that the September quarter GDP print demonstrates that reforms and fiscal consolidation have propelled the Indian economy's robust growth and momentum. She highlighted that various high-frequency indicators point to continued economic momentum and broad-based consumption growth.
The positive GDP data has implications for the Indian stock market as well. Experts predict a strong opening for the market, with banking and manufacturing stocks expected to outperform. Analysts anticipate that the surprising GDP growth will attract both domestic and foreign investors, potentially leading to a trend reversal in FII's trade patterns.
Looking ahead, while the current growth momentum is encouraging, some economists anticipate a moderation in the second half of the fiscal year due to factors such as the normalization of government capital expenditure and potential global headwinds. The International Monetary Fund (IMF) projects India's economic growth rate at 6.6% for 2025-26, while others are revising their forecasts upwards. Crisil, for example, has raised India's fiscal 2026 GDP forecast to 7%.
Despite potential challenges, the strong GDP growth in the July-September quarter underscores the Indian economy's resilience and its potential for sustained growth. With ongoing reforms, infrastructure development, and a favorable policy environment, India is well-positioned to maintain its status as one of the fastest-growing major economies in the world.
