India’s economy is on track to cross the $4 trillion mark this financial year, with real GDP growth hitting 8.2 per cent in the July-September quarter, the fastest in six quarters. Chief Economic Adviser V Anantha Nageswaran stated that full-year growth will comfortably exceed 7 per cent, up from the earlier 6.3-6.8 per cent forecast in the Economic Survey. This strong showing comes despite global headwinds like US tariffs, thanks to solid domestic demand, low inflation, and recent GST rate cuts that spurred production ahead of the festive season.​

The first half of FY26 has already clocked 8 per cent real GDP growth, with the secondary sector expanding 8.1 per cent and the tertiary sector at 9.2 per cent. Nominal GDP rose 8.7 per cent in Q2, building on 7.8 per cent growth in the April-June period. Inflation has plunged to a record low of 0.25 per cent in October, well below the RBI’s 4 per cent target, boosting household spending power.​

Manufacturing and Services Lead Charge

Manufacturing bounced back sharply with 9.1 per cent growth in Q2, driven by factories ramping up output before festivals following GST cuts on September 22 that eased costs for consumers and producers alike. The sector’s revival reflects government pushes like the Production Linked Incentive scheme, which has drawn over Rs 1.76 lakh crore in investments across 14 key areas. Index of Industrial Production also climbed 4 per cent in September, led by 4.8 per cent manufacturing expansion, signalling higher jobs and investment.​

Services grew 9.2 per cent, powered by financial, real estate, and professional services at 10.2 per cent, alongside IT and IT-enabled services that now form a global export powerhouse. Private consumption jumped 7.9 per cent from 6.4 per cent last year, showing rural recovery and urban discretionary buys gaining steam despite a dip in government spending. Agriculture added 3.5 per cent, aided by good crop output.​

Even as US tariffs hit exports hard – shipments to America down sharply from $8.8 billion to $5.5 billion between May and September – merchandise exports overall rose 0.63 per cent to $254.25 billion in April-October. Services exports surged 9.75 per cent to $237.55 billion, cushioning the blow and keeping trade buoyant.​

Inflation Cools, Rate Cuts in Sight

Headline CPI inflation at 0.25 per cent marks the ninth straight month below RBI’s target, with food prices falling 5.02 per cent due to cheaper vegetables, cereals, and oils. Wholesale inflation dipped to minus 1.21 per cent, easing business costs and paving the way for more consumption. Rural inflation turned negative at minus 0.25 per cent, while urban held at 0.88 per cent.​

Economists now see the RBI trimming rates by 25 basis points to 5.25 per cent at its December 3-5 meeting, after 100 basis points of cuts earlier in 2025. Yet, the sizzling GDP print has tempered urgency, with some like ICRA’s Aditi Nayar noting lower odds for easing. Labour markets strengthened too, with participation at a six-month high of 55.4 per cent and 21 lakh net EPFO additions in July.​

Projections Point to Brighter Future

SBI Research eyes 7.6 per cent full-year growth, pushing the economy to $4.4 trillion by March 2027, from $3.9 trillion now. IMF pegs 6.6 per cent but acknowledges tariff drags, while RBI upped its FY26 view to 6.8 per cent. GST collections hit Rs 1.96 lakh crore in October, up 4.6 per cent, proving rate rationalisation widens the tax base without hurting revenues.​

Government reforms like labour codes, Skill India, and export guarantees are set to sustain this momentum, aiming for a $7.3 trillion economy by 2030. White-collar hiring via Naukri JobSpeak rose 10.1 per cent in September, led by AI roles up 61 per cent. As India eyes Viksit Bharat, these tailwinds promise inclusive expansion amid global flux.​

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