India's Economy Soars with 8.2% Growth in Q2, Marking Six-Quarter High

India's economy expanded by an impressive 8.2% in the July-September quarter of fiscal year 2025-26, achieving its fastest growth rate in six quarters. This remarkable surge significantly surpassed most economic forecasts, as reported by The Times of India on November 29, 2025.

The robust economic expansion was primarily fueled by a strong rebound within the manufacturing sector and sustained vigorous activity in the services sector. Official data from the National Statistics Office (NSO) highlighted these two sectors as central to the accelerated growth, according to The Indian Express on November 28, 2025.

This performance notably exceeded analysts' predictions, which generally anticipated a growth rate around 7.3% for the quarter. Consequently, economists now widely expect India's full-year growth for 2025-26 to comfortably surpass 7%, Mint reported on November 28, 2025.

The manufacturing sector demonstrated a significant turnaround, achieving a 9.1% growth in Q2, a substantial increase from 2.2% in the same period last year. This surge was attributed to higher industrial output and improved capacity utilization, as detailed by Vajiram & Ravi on November 29, 2025.

Meanwhile, the services sector continued its strong trajectory, expanding by over 9% for the second consecutive quarter. Financial, real estate, and professional services notably grew by 10.2%, contributing significantly to the overall economic momentum, The Economic Times reported on November 28, 2025.

Strong private consumption, boosted by lower inflation and recent Goods and Services Tax (GST) rate cuts, alongside elevated public investment, also played a crucial role. Prime Minister Narendra Modi praised the "pro-growth policies and reforms" for this encouraging outcome, according to organiser on November 29, 2025.

Chief Economic Advisor V. Anantha Nageswaran confirmed that the full-year growth would be "7% or more than that," revising previous forecasts upwards. This optimistic outlook underscores the government's confidence in India's sustained economic momentum, The Economic Times stated on November 28, 2025.

• Background Context and Historical Perspective: India's Q2 FY26 growth of 8.2% follows a 7.8% expansion in Q1, bringing the first half of the fiscal year's growth to 8%. This marks a significant acceleration from 5.6% in Q2 FY25 and 6.1% in H1 FY25, positioning India as the world's fastest-growing major economy. The last time India's GDP grew faster was in Q4 FY24 (January-March 2024), as noted by TaxTMI on November 28, 2025.

• Key Drivers and Sectoral Performance: Beyond manufacturing's 9.1% growth and the services sector exceeding 9%, construction also saw robust growth at 7.2%. The broader tertiary sector, encompassing services, grew 9.2%, with financial, real estate, and professional services leading at an impressive 10.2%. Public administration, defense, and other services also contributed significantly with 9.7% growth, according to The Indian Express on November 28, 2025.

• Consumption and Investment Trends: Private Final Consumption Expenditure (PFCE) increased by 7.9% in Q2, up from 7% in Q1, driven by factors like lower food inflation and GST rationalization. Government Final Consumption Expenditure, however, saw a contraction of 2.7% after a 7.4% rise in Q1, as reported by icra Ratings on November 28, 2025. Gross Fixed Capital Formation (GFCF) grew by 7.3%.

• Expert Opinions and Revised Forecasts: Economists from various institutions have revised their full-year forecasts upwards following the strong Q2 performance. For instance, Crisil's chief economist Dharmakirti Joshi raised the projection to 7%, while State Bank of India is projecting 7.6% growth. Aditi Nayar, Chief Economist at ICRA, noted that the Q2 performance significantly surpassed expectations, according to Business Standard on November 28, 2025.

• Global Context and External Factors: India's strong growth occurred despite prevailing global uncertainties and the imposition of 50% US tariffs on Indian goods. While some economists, like those from ANZ, cautioned about potential risks to demand from these tariffs, the economy demonstrated remarkable resilience, as highlighted by Trading Economics on November 28, 2025. The IMF, in its October outlook, had projected 6.6% for 2025, assuming these tariffs remain in place.

• Monetary Policy Implications: The Reserve Bank of India (RBI) had initially projected a 7% growth rate for Q2. With the actual growth significantly exceeding this, the RBI might consider revising its full-year projection of 6.8% upwards during its upcoming Monetary Policy Committee meeting. Some economists, like Sujan Hajra of Anand Rathi, still anticipate a 25 basis points policy rate cut despite robust growth, Business Standard reported on November 28, 2025.

• Government Policies and Future Outlook: The government attributes the strong growth to its pro-growth policies, ongoing reforms, and elevated public investment. Measures such as GST rationalization, which came into effect from September 22, are expected to further bolster consumption and economic activity. The Chief Economic Advisor emphasized continued reforms to strengthen "Ease of Living" for every citizen, as stated by The Times of India on November 29, 2025.

• Challenges and Considerations: Despite the impressive figures, some economists point to a slower nominal GDP growth of 8.7% as a potential concern for achieving ambitious tax revenue targets. Additionally, while rural demand has broadened and contributed to growth, investment revival and urban consumption still show some areas of weakness, according to The New Indian Express on November 28, 2025.