GDP growth hit 7.6% in H1 FY26, up from 6.1% last year, driven by robust domestic demand, manufacturing rebound, and GST cuts boosting consumption. Q2 likely at 7.3-7.5% despite US tariffs, with resilient rural recovery and services offsetting export drags.
India's economy expanded 7.6% in April-September FY26, surpassing prior-year levels amid strong private consumption, rural recovery via good monsoons, and urban durable spending post-GST reductions. Manufacturing and services led, with government capex steady despite global tariff pressures.
Challenges Ahead
Nominal GDP growth slowed to 8.8% in Q1, risking budget targets due to rupee depreciation and US tariffs on select imports. Net exports turned negative, but domestic demand anchors resilience. IMF projects 6.6% FY26 growth, positioning India as fastest major economy.
Key Highlights
-
H1 FY26 Growth: 7.6% YoY (vs 6.1% prior year).
-
Q2 Estimate: 7.3-7.5%; GVA at 7.3%.
-
Positives: Rural demand, GST cuts, manufacturing surge.
-
Headwinds: US tariffs, nominal growth slowdown.
-
Outlook: 6.8% FY26 (RBI); $5tn target delayed to FY28.
Sources: Economic Times, Vajiram & Ravi, ICICI Report.