India’s Economy Accelerates to 8.2% Growth in Q2 FY26
India’s GDP surged to 8.2% in the second quarter of FY26, marking the fastest growth rate in six quarters and significantly exceeding analyst expectations. This represents a substantial jump from the 5.6% growth recorded during the same period last fiscal year.
Key Takeaways
- GDP growth hits 8.2% in Q2 FY26, fastest in six quarters
- Manufacturing sector expands at robust 9.1%, more than four times last year’s pace
- Services sector maintains strong momentum with 9.2% growth
- Private consumption remains healthy at 7.9%
Sector-Wise Performance
The manufacturing sector was a standout performer, growing at 9.1% compared to just 2.2% a year ago. Economists note this surge was partly driven by frontloading of exports to the US ahead of anticipated 50% tariff increases.
Construction activity showed healthy expansion at 7.2%, while the services sector continued its positive trajectory with 9.2% growth in Q2 versus 7.2% a year earlier.
Consumption and Investment Trends
Private consumption remained robust at 7.9%, up from 6.4% last year and slightly higher than the 7% recorded in Q1. Gross fixed capital formation, which indicates infrastructure and asset creation, maintained its upward trend at 7.3% compared to 6.7% a year ago, though slightly lower than Q1’s 7.8%.
“The confluence of stable inflation, sustained public capex, and reform momentum positions the economy to navigate risks, as reflected in upward revisions to FY26 GDP growth projections by various agencies,” said Chief Economic Advisor V Anantha Nageswaran.
Nageswaran added that India reaching the $4 trillion economy milestone “as early as next year” is not unrealistic given the current growth trajectory.
Policy Impact and Cautions
The government highlighted how GST rate reductions have helped lower costs for goods and services, supporting consumption while expanding the tax base. However, economists cautioned about potential risks from slower nominal growth, which stood at 8.7% in Q2 with nominal GDP reaching an estimated Rs 85.25 lakh crore.
