India’s economy is projected to have expanded 7.3% year-on-year in the July–September quarter of 2025, driven by strong rural consumption and government expenditure. Despite robust growth, private investment remains subdued, and economists caution that future growth may moderate amid global uncertainties.
India’s gross domestic product (GDP) likely grew by 7.3% in the second quarter (July–September) of fiscal year 2025-26, slightly down from 7.8% in the previous quarter, based on a Reuters survey of economists. This growth was supported by improved rural spending, buoyed by favorable agricultural output, and sustained government expenditures that continue to prop up the economy.
Household consumption, comprising about 60% of the economy, showed marked improvement, particularly in rural areas. However, private sector investments and urban demand have lagged, reflecting uneven growth dynamics within the country. Inflation remained soft, with consumer inflation averaging around 2%, supporting disposable incomes and spending capacity.
Economists also noted that the GDP deflator—a measure used to strip out inflation effects—was low, making real GDP growth appear stronger statistically. The government’s recent Goods and Services Tax (GST) rate cuts, effective from late Q2, are expected to provide additional stimulus in the coming quarters.
Key Highlights:
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India’s GDP projected to grow 7.3% in July-September quarter, down from 7.8% in Q1
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Growth driven by robust rural consumption and government spending
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Private investment and urban demand remain subdued amid global uncertainties
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Inflation stayed soft, supporting consumer spending and nominal GDP growth
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Low GDP deflator artificially inflates real GDP growth figures
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GST rate cuts implemented in September expected to boost demand ahead
Economists forecast a moderation in growth in the coming quarters due to multiple external factors
Sources: Reuters, Moneycontrol, Business Standard, Economic Times