India's economic momentum continues to surprise analysts as second-quarter GDP figures are poised to demonstrate robust growth between 7% to 8%, potentially exceeding the Reserve Bank of India's projection of 7% for Q2FY26. This comes on the heels of an impressive first-quarter performance that saw growth reach 7.8% - marking a five-quarter high.
Economists Bullish on Q2 Performance
Multiple economic indicators and expert analyses suggest the Indian economy maintained its strong growth trajectory during the July-September period. According to a Mint poll, Q2 GDP growth likely stayed at 7.2%, while the State Bank of India projects an even higher 7.5% expansion for the quarter.
Manoranjan Sharma, Chief Economist at Infomerics Ratings, believes India's Q2 GDP may register between 7% to 7.2%, supported by multiple positive factors. "Firming urban demand ahead of the festive season, a meaningful revival in rural spending, and sustained public-sector investment have created favorable conditions for growth," Sharma noted.
Consumption Drives Economic Expansion
The consumption story remains central to India's economic narrative, contributing 55-60% of GDP. Sharma highlighted a significant turnaround in rural economies, with rural demand rising 7.7% year-on-year in Q2 - the fastest growth rate in 17 quarters after several muted years.
"Softer inflation, improved credit availability, and aggressive festive promotions in automobiles, appliances, and electronics have lifted sentiment across both urban and rural markets," Sharma explained. High-frequency indicators support this assessment, showing 26% growth in E-way bill generation and GST collections approaching the ₹1.9 lakh crore mark.
The Nominal GDP Concern
Despite the strong real growth figures, economists express concern about nominal GDP growth - economic expansion before adjusting for inflation - which may have slowed further to 8.0% from 8.8% in Q1. Namrata Mittal, Chief Economist at SBI Mutual Fund, expects real GDP growth to accelerate to 8% year-on-year but notes that nominal GDP is projected at only 8.5-9% in Q2.
"While real growth appears robust, nominal GDP remains well below the desired 11-12% range for India," Mittal cautioned. Union Bank of India economists echo this concern, projecting nominal GDP growth slowing sharply to 8.0% from 8.8% in Q1 and 8.3% in the same period last year.
Statistical Drivers and Future Outlook
Experts identify several factors driving the strong quarterly performance, including strong government spending, favorable base effects, and subdued deflator growth. The impact of 50% US tariffs on Indian goods did not fully materialize during the quarter due to continued front-loading of exports.
However, economists warn that GDP numbers could moderate in the second half of FY26 as these statistical drivers begin to fade. Additionally, the effect of US tariffs will likely reflect more strongly in subsequent data due to delays in an India-US trade deal.
The official Q2FY26 GDP data will be released on Friday, November 28, providing conclusive evidence of whether India's economic engine maintained its impressive momentum through the festive season and beyond.
