India’s economy demonstrated robust resilience, clocking an impressive 8.2% real GDP growth in the July-September quarter of FY2025-26, up from 5.6% in the same period last year, according to official data released today by the Ministry of Statistics and Programme Implementation. This acceleration, driven by strong domestic consumption and investment, underscores the positive impact of GST rate rationalization, which has provided a “measurable boost” to household spending and helped navigate global headwinds like inflation and geopolitical tensions. Finance Minister Nirmala Sitharaman hailed the figures as evidence of India’s steady path toward becoming a $5 trillion economy, with projections now eyeing 7.5-8% annual growth. However, experts caution that sustaining this momentum requires addressing rural distress and export slowdowns amid a potential cyclone threat on the eastern coast. The news has boosted market sentiment, with the Sensex gaining over 1% in early trading.
Sector-wise, manufacturing led the charge with a stellar 11.4% expansion, fueled by the Production Linked Incentive (PLI) schemes and a sharp rebound in corporate capex after two subdued years. Construction grew at 9.7%, reflecting continued government thrust on infrastructure through the ₹11.1 lakh crore allocation in the 2025-26 Union Budget. Agriculture, which had contracted marginally last year due to erratic monsoons, bounced back to 3.8% growth, aided by a normal southwest monsoon and higher kharif output of rice and pulses.
Services remained the backbone, expanding at 7.9%, with trade, hotels, and transport benefiting from festive-season spending and a tourism boom that saw foreign tourist arrivals cross pre-pandemic levels for the first time in October 2025. Private final consumption expenditure rose 7.3%, the strongest in nine quarters, as lower GST on daily essentials (from 12-18% to 5-8% slabs in the July 2025 GST Council meet) put more money in middle-class pockets.
On the expenditure side, gross fixed capital formation surged 10.2%, signaling a clear private-sector investment revival. Government final consumption expenditure also grew at 8.1%, driven by higher welfare spending under schemes like PM-KISAN and MGNREGA, which saw enhanced allocations to counter rural distress.
Despite the cheer, economists flagged structural concerns. Exports grew only 2.1% in dollar terms during April-September 2025, squeezed by weak demand in Europe and a stronger rupee. Imports rose faster at 6.8%, widening the trade deficit to $148 billion in the first half of the fiscal. Core inflation, though cooling to 4.1%, remains sticky due to food and fuel volatility. Rating agencies Moody’s and Fitch welcomed the numbers but retained India’s sovereign rating at Baa3/BBB- with a stable outlook, citing high public debt (around 82% of GDP) and climate-related fiscal risks.
The Reserve Bank of India, which meets next week for its December monetary policy review, now faces a pleasant dilemma. Most analysts expect the repo rate to stay unchanged at 6.5% for the third consecutive review, with a possible 25 bps cut only in February 2026 once inflationary pressures from Cyclone Ditwah become clearer.
Prime Minister Narendra Modi termed the data “a testament to India’s economic resilience and reform momentum,” while opposition leaders credited the growth to a statistical base effect and demanded more direct relief for farmers and the unorganised sector. With two more quarters to go, India remains firmly on track to be the fastest-growing major economy for the third consecutive year, strengthening its claim as the brightest spot in an otherwise uncertain global landscape.