India's economy grew at 7.3% in Q2 FY26 on rural and government spending boost: Poll
- IBEF
- November 26, 2025
India’s economy is estimated to have grown by 7.30% in Q2 FY26, supported by stronger rural spending and sustained government expenditure, according to a Reuters poll of economists. Household consumption, which accounts for nearly three-fifths of the economy, improved due to better agricultural output. However, urban demand and private investment remained subdued. Despite the 50% tariff imposed by the United States (US) on Indian goods in August, which contributed to foreign investors withdrawing Rs. 1,42,752 crore (US$ 16 billion) from Indian equities, India continues to remain one of the fastest-growing major economies. The poll also showed that Gross Domestic Product (GDP) growth slowed slightly from 7.80% in the previous quarter, partly due to a very low deflator that has temporarily boosted real GDP readings.
Economists anticipate that growth momentum may soften in the coming quarters, with projections of 6.80% for Q3 and 6.30% for Q4 FY26. Nominal GDP growth is also expected to moderate as inflation remains extremely low, wholesale inflation was negligible, while consumer inflation averaged around 2% in Q2. A recent cut in the Goods and Services Tax on 375 items from September 22, 2025, is likely to support consumption, although the impact may be partly limited by high household debt. Gross Value Added (GVA) growth is estimated at 7.15% for Q2, reflecting steady underlying economic activity even as private capital expenditure shows signs of caution amid global uncertainty.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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