India’s GDP grew at a six-quarter high of 8.2% in the second quarter (July-September) of the financial year 2025-26, buoyed by a relatively strong performance of the manufacturing and services sectors, official data showed. 

Data released by the Ministry of Statistics and Programme Implementation on Friday showed that the last time India’s GDP grew faster was in the quarter ended March 2024, the final quarter of 2023-24. 

The growth in Q2 of 2025-26 was significantly faster than the 5.6% growth recorded in the same quarter of last year, and even faster than the 7.8% in Q1 of this year. Taken together, growth in the first half of this financial year stands at 8%. 

“The 8.2% GDP growth in Q2 of 2025-26 is very encouraging,” Prime Minister Narendra Modi posted on X. “It reflects the impact of our pro-growth policies and reforms. It also reflects the hard work and enterprise of our people. Our government will continue to advance reforms and strengthen Ease of Living for every citizen.”

Nominal issues

However, economists say that while the real GDP growth rate — which removes the inflation effect — has come in higher than expected, the relatively low nominal growth rate of 8.7% shows economic activity is still subdued.

“The sharply higher than expected 2QFY26 GDP was broad based but comes on the back of a very low deflator,” Upasna Bhardwaj, chief economist at Kotak Mahindra Bank said. “The single digit nominal GDP growth continues to signal tepid underlying activity.”

According to Bank of Baroda chief economist Madan Sabnavis, this lower nominal GDP growth would make it more difficult for the government to achieve its fiscal deficit target of 4.4% since that had been pegged to a nominal growth of 10.1%.

The Indian National Congress, too, took aim at the government’s data, pointing out the irony of the data release coming days after the IMF gave India’s national accounts the second-lowest rating of ‘C’. The party also highlighted a lack of growth in capital investment, and the low GDP deflator.

Speaking at a press briefing following the data release, chief economic adviser V. Anantha Nageswaran said that the economic performance in Q2 has induced the government to revise upwards its full-year growth estimate to “7% or higher”.  

“The confluence of stable inflation, sustained public capex, and reform momentum positions the economy to navigate risks, as reflected in upward revisions to FY26 growth projections by various agencies,” Mr. Nageswaran said.

Manufacturing surge

The manufacturing sector grew at a six-quarter high of 9.1% in Q2 of 2025-26, up from 7.7% in Q1. While some of this was genuine growth, the sector’s performance was also bolstered by a low base effect. 

“Manufacturing growth of 9.1% can be corroborated by double digit growth witnessed in corporate performance in this quarter,” Mr. Sabnavis said. “A low base effect of 2.1% has also helped to push up the number.”

The aggregate services sector, too, grew at a relatively robust 9.2% in Q2 of this financial year, which came on a high base of 7.2% in Q2 last year. Looking deeper, the ‘financial services, real estate and professional services’ sub-sector grew at a nine-quarter high of 10.2%. 

This was followed by the ‘public administration, defence and other services’ sub-sector, which grew at 9.7%.

“The 9.7% surge in the public administration, defence and other services segment in Q2 FY2026 was quite surprising given that the Government of India’s (GoI’s) non-interest revenue expenditure had contracted by a sharp 11.2% YoY in the quarter, as against the 6.9% uptick seen Q1 FY2026.

The agriculture sector grew at 3.5% in Q2 of 2025-26, down from the 4.1% seen in Q2 of last year, and the 3.7% in Q1 of this year.

Opposition criticism

“It is ironic that the quarterly GDP numbers have been released very soon after an IMF report gave the second-lowest grade of C to India’s national accounts statistics in its annual assessment of the Indian economy,” INC General Secretary in-charge of communications posed on X. 

Mr. Ramesh added that the GDP are disappointing, especially due to the performance of capital investment and the usage of a low GDP deflator.

“There has been no upswing in Gross Fixed Capital Formation,” Mr. Ramesh said. “High GDP growth rates are simply not sustainable in the absence of any renewed momentum in private investment. That is clearly not in evidence.”

“The unrealistically low GDP deflator — which implies an inflation rate of only 0.5% — is at complete variance with the experiences of crores of households burdened by crushing price rise in their items of daily consumption,” he added.

Published – November 28, 2025 04:30 pm IST