India’s economy continues its upward trajectory, with recent data revealing robust growth in the July-September quarter of the financial year 2025-26. The country’s real GDP growth has been estimated at an impressive 8.2%, a significant jump from the 5.6% recorded in the same period last year. This positive momentum underscores India’s position as a leading global economy and fuels optimism about achieving long-term development goals.
Strong Q2 Performance Drives Economic Expansion
The latest Quarterly Estimates of Gross Domestic Product (GDP) released by the National Statistics Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI), paint a picture of a thriving economy. The 8.2% real GDP growth in Q2 FY25-26 follows a solid 7.8% expansion in the April-June quarter, demonstrating consistent performance throughout the first half of the fiscal year. Nominal GDP also saw healthy growth, reaching 8.7% during the September quarter.
This acceleration in growth is particularly noteworthy when considering the global economic landscape, which remains characterized by uncertainty and slower expansion in many major economies. India’s resilience and strong domestic demand are key factors driving this positive outcome.
Sectoral Contributions to Growth
A closer look at the data reveals that the secondary and tertiary sectors were the primary engines of growth during the July-September quarter. The Secondary sector, encompassing manufacturing and construction, contributed 8.1% to the overall real GDP growth, while the Tertiary sector, which includes services, added a substantial 9.2%.
Manufacturing and Construction Lead the Way
Specifically, the manufacturing sector experienced a robust 9.1% growth rate at constant prices, indicating strong industrial activity. Construction also performed well, registering a 7.2% increase. These figures suggest a positive outlook for investment and infrastructure development within the country.
Services Sector Remains a Key Driver
The Financial, Real Estate & Professional Services sector within the Tertiary sector continued to be a significant contributor, sustaining a growth rate of 10.2% at constant prices. This highlights the increasing sophistication and dynamism of India’s service economy.
However, it’s important to note that the Agriculture and Allied sector saw a more moderate growth of 3.5%, and Electricity, Gas, Water Supply and Other Utility Services grew by 4.4% during the same period. These sectors, while important, didn’t contribute to the same extent as manufacturing and services.
First Half Performance and Long-Term Outlook
The combined effect of these sectoral performances resulted in an 8.0% real GDP growth for the first half (April-September) of FY25-26, a marked improvement compared to the 6.1% growth recorded in the same period last year. This strong start positions India well for continued economic expansion throughout the remainder of the fiscal year.
Looking further ahead, India’s economic ambitions are substantial. In fiscal year 2024-25, the economy grew by 6.5% in real terms, aligning with projections from the Reserve Bank of India. Prior to that, India demonstrated impressive growth rates of 8.7% and 7.2% in 2021-22 and 2022-23 respectively, solidifying its status as the world’s fastest-growing major economy.
To achieve the vision of a ‘Viksit Bharat’ – a developed India – by 2047, sustained economic growth is crucial. The Economic Survey 2024-25 estimates that India needs to maintain an average economic growth rate of around 8% at constant prices for the next decade or two. This ambitious target requires continued reforms and effective implementation of policies.
From Fragile Five to Economic Powerhouse
India’s economic journey has been transformative. In 2013-14, the country was ranked 11th in terms of economic size. Today, it has risen to become the fourth-largest economy globally, surpassing numerous nations. This progress is particularly striking when considering that in 2013, India was part of the “Fragile Five” – a group of emerging economies facing economic vulnerabilities.
The term, coined by Morgan Stanley, highlighted concerns about India’s economic stability alongside Brazil, Indonesia, South Africa, and Turkey. Now, India stands as a beacon of growth and resilience, demonstrating a remarkable turnaround.
However, the focus is shifting from simply increasing the size of the economy to improving the per capita income of its citizens. While India’s overall GDP has grown significantly, ensuring that this growth translates into tangible benefits for all segments of the population remains a key challenge.
Sustaining Momentum: The Path Forward
The recent GDP figures are undoubtedly encouraging, but sustaining this momentum requires a continued commitment to structural reforms, investment in infrastructure, and fostering a conducive environment for businesses. Addressing challenges related to agricultural productivity, skill development, and job creation will also be essential.
Furthermore, navigating global economic headwinds and maintaining macroeconomic stability will be crucial for ensuring long-term, inclusive growth. The government’s focus on digitalization, sustainable development, and promoting innovation will play a vital role in realizing India’s economic potential and achieving its ambitious goals for 2047.
