Finance Ministry Estimates India’s Q2 FY27 GDP Growth at 7.3%

India’s economy is estimated to have grown by 7.3% in the July–September quarter of FY2026-27, according to the Finance Ministry’s September Monthly Economic Review. The estimate follows real GDP growth of 7.8% in the first quarter, indicating that domestic economic activity remained strong through the first half of the financial year.

The Ministry’s nowcasting model points to continued support from manufacturing, construction, services and investment, even as the external environment remains uncertain.

Strong Momentum Carries Into the Second Quarter

India entered Q2 FY27 after recording broad-based growth in the April–June quarter. Manufacturing and construction remained important contributors, while services continued to provide a major share of economic expansion.

The Finance Ministry noted that domestic demand, investment activity and improving business conditions continued to support growth during the second quarter. High-frequency indicators covering production, credit, electricity consumption and capital goods also pointed to sustained economic activity.

The 7.3% nowcast is not the official GDP estimate for the quarter. It is a model-based assessment using currently available economic indicators, with the official national accounts data to be released separately by the Ministry of Statistics and Programme Implementation.

Investment and Domestic Demand Remain Important Growth Drivers

Investment activity continues to be supported by public capital expenditure and infrastructure development, while private-sector investment conditions have also shown improvement.

Bank credit, capital-goods production and construction activity remain important indicators of underlying investment demand. Consumer activity has also provided support, although performance differs across urban and rural segments.

Together, these factors have helped maintain domestic momentum despite slower growth in parts of the global economy.

Manufacturing and Services Support Expansion

Manufacturing activity remained resilient during the quarter, supported by new orders and domestic demand. Construction has also benefited from infrastructure spending and continued activity in housing and industrial projects.

Services remain a major pillar of the economy, with financial services, trade, transport, communications and other market-based activities contributing to overall growth.

The broad distribution of growth across sectors reduces dependence on any single component of the economy and provides a more diversified base for expansion.

External Risks Remain

The Finance Ministry also identified several external risks that could affect the outlook. Higher crude oil prices could increase India’s import bill and inflationary pressures, while elevated global bond yields may influence capital flows and financing conditions.

Geopolitical uncertainty and changes in global trade conditions remain additional concerns for an economy that is increasingly integrated with international markets.

Domestic growth, however, continues to be supported by investment, consumption and a relatively stable financial system.

India Enters Second Half of FY27 With Strong Growth Base

If the 7.3% nowcast is reflected in the official GDP data, India would complete the first half of FY2026-27 with another period of strong real economic expansion following the 7.8% growth recorded in Q1.

The combination of manufacturing, construction, services and investment has kept the economy on a broad growth path. Continued strength in these sectors provides India with a solid base as FY27 moves into its second half.

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References

Department of Economic Affairs, Ministry of Finance — Monthly Economic Review
https://www.dea.gov.in/reports-monthly-economic-report

Ministry of Statistics and Programme Implementation — National Accounts and GDP Statistics
https://www.mospi.gov.in/

Moneycontrol — India’s Growth Momentum Strong but Global Risks Mount
https://www.moneycontrol.com/news/business/economy/india-s-growth-momentum-strong-but-global-risks-mount-finance-ministry-flags-oil-yields-and-capital-flows-14042528.html

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