India’s economy likely to grow 7.3% in Q2 FY27: Finance Ministry
- IBEF
- October 5, 2026
India’s economy is expected to grow by 7.3% in Q2 FY27, supported by resilient domestic demand and investment, according to the Finance Ministry’s Monthly Economic Review for September 2026. The economy entered the second quarter from a position of strength after recording 7.8% growth in Q1 FY27. High-frequency indicators for July and August suggest that growth momentum has continued, although at a more measured pace. While e-way bill generation and manufacturing activity moderated, services activity strengthened in August, supported by new business and employment. Healthy electricity and fuel consumption, sustained bank credit expansion and stronger production of capital and infrastructure goods also indicate continued investment momentum.
The review highlighted a strong export outlook, noting that total exports had reached nearly Rs. 37.95 lakh crore (US$ 400 billion) during the first five months of FY27. At the current run rate, overall exports for the full financial year could approach Rs. 94.97 lakh crore (US$ 1 trillion). However, it cautioned that growth cannot be taken for granted amid geopolitical polarisation, global supply chain disruptions, higher crude oil prices, tightening financial conditions and trade uncertainty. Rising oil prices and global bond yields are also putting pressure on the rupee and capital flows. Higher interest rates in developed economies could encourage investors to retain funds in domestic markets, slowing cross-border capital flows. Competition for investment is intensifying as countries seek capital for artificial intelligence infrastructure and manufacturing capacity. Uncertainty surrounding trade relations with the US, tariff pressures and crude oil prices continue to weigh on investor sentiment towards India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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