India’s growth engine holds firm; Q2 GDP seen at 7.5%

The Indian economy is seen to have remained robust in the second quarter of the fiscal year 2026-27 with GDP growth seen in the range of 7.5%. This is amid geopolitical tensions and deficient rains. Most economists and experts believe that the economy continued to register strong growth in the July to September 2026 quarter but expect growth to slow down in the second half of the fiscal year as the impact of the below-average rains and higher inflation is felt.

Madan Sabnavis, Chief Economist, Bank of Baroda forecast GDP growth of 7.4% in the second quarter of the fiscal year. “Good corporate profits will be reflected in value added in manufacturing and hotels. Agriculture will not reflect adverse monsoon as the second quarter does not cover major harvest,” he elaborated.

SBI Ecowrap, in a recent report, was more optimistic and forecast GDP growth at about 7.8% in the second quarter of the fiscal. “Despite challenges emanating from global front, India is expected to deliver robust growth in one more quarter at 7.8% as all leading indicators point out to the same... El Niño impact visible in states across Rabi and Kharif...though exposure is limited and contained to specific pockets,” it had said.

Pranjal Ghate, Economist, Brickwork Ratings said the agency expects growth to slow down to 7% in the second quarter of the fiscal.  “Our growth outlook remains broadly unchanged, with India's Q2 FY27 GDP growth expected to moderate to around 7% from 7.8% in Q1, supported by resilient domestic consumption, investment and services activity. Elevated input costs, evidenced by a 2-year high inflation in October 2026, and global uncertainties remain key headwinds,” he said.

The Indian economy grew by 7.8% in the first quarter of the fiscal despite the impact of the West Asia war. Since then, most agencies have also scaled up their growth forecast for Inia for FY27 to over 7%.

The finance ministry in its latest Monthly Economic Outlook had pegged Q2 GDP growth at 7.35% and at 7.3% for FY27. The Reserve Bank of India has also projected the economy to grow by 7.2% in the second quarter of the fiscal and by 7.1% in the full fiscal year.

Official data on GDP growth estimates for the second quarter of FY27 will be released later this month on November 30.

A recent report by Motilal Oswal also noted that the growth outlook remains firm, but some moderation is likely in the second half of the fiscal year.

“Our EAI-GVA suggests that economic activity remained resilient in 2QFY27, with EAI-GVA growth averaging 7% YoY during Jul-Sep'26, albeit moderating from 7.8% in 1QFY27. In 1HFY27, EAI-GVA growth averaged 7.4%,” it said, adding that strong investment and consumption, healthy manufacturing and services activity, robust credit growth, and sustained government infrastructure spending continue to underpin domestic activity.

However, tighter financial conditions, elevated inflation, and a less supportive global environment are likely to result in some moderation in 2HFY27. “We retain our FY27 real GDP growth forecast at 7.2%, above the RBI's 7.1% forecast. We peg nominal GDP growth at around 13.5% in FY27,” it further said.