India’s GDP growth at six-quarter high of 8.2% in Q2 FY26, driven by manufacturing and services despite tariffs
Posted by ProbablySatan420
India’s GDP growth at six-quarter high of 8.2% in Q2 FY26, driven by manufacturing and services despite tariffs
Posted by ProbablySatan420
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> However, economists say that while the real GDP growth rate — which removes the inflation effect — has come in higher than expected, the relatively low nominal growth rate of 8.7% shows economic activity is still subdued.
> “The sharply higher than expected 2QFY26 GDP was broad based but comes on the back of a very low deflator,” Upasna Bhardwaj, chief economist at Kotak Mahindra Bank said. “The single digit nominal GDP growth continues to signal tepid underlying activity.”
> According to Bank of Baroda chief economist Madan Sabnavis, this lower nominal GDP growth would make it more difficult for the government to achieve its fiscal deficit target of 4.4% since that had been pegged to a nominal growth of 10.1%.
> The Indian National Congress, too, took aim at the government’s data, pointing out the irony of the data release coming days after the IMF gave India’s national accounts the second-lowest rating of ‘C’. The party also highlighted a lack of growth in capital investment, and the low GDP deflator.
> Mr. Ramesh added that the GDP are disappointing, especially due to the performance of capital investment and the usage of a low GDP deflator.
> “There has been no upswing in Gross Fixed Capital Formation,” Mr. Ramesh said. “High GDP growth rates are simply not sustainable in the absence of any renewed momentum in private investment. That is clearly not in evidence.”
> “The unrealistically low GDP deflator — which implies an inflation rate of only 0.5% — is at complete variance with the experiences of crores of households burdened by crushing price rise in their items of daily consumption,” he added
!ping IND
The manufacturing sector grew at a six-quarter high of 9.1% in Q2 of 2025-26, up from 7.7% in Q1. While some of this was genuine growth, the sector’s performance was also bolstered by a low base effect.
“Manufacturing growth of 9.1% can be corroborated by double digit growth witnessed in corporate performance in this quarter,” Mr. Sabnavis said. “A low base effect of 2.1% has also helped to push up the number.”
The aggregate services sector, too, grew at a relatively robust 9.2% in Q2 of this financial year, which came on a high base of 7.2% in Q2 last year. Looking deeper, the ‘financial services, real estate and professional services’ sub-sector grew at a nine-quarter high of 10.2%.
This was followed by the ‘public administration, defence and other services’ sub-sector, which grew at 9.7%.
“The 9.7% surge in the public administration, defence and other services segment in Q2 FY2026 was quite surprising given that the Government of India’s (GoI’s) non-interest revenue expenditure had contracted by a sharp 11.2% YoY in the quarter, as against the 6.9% uptick seen Q1 FY2026.
The agriculture sector grew at 3.5% in Q2 of 2025-26, down from the 4.1% seen in Q2 of last year, and the 3.7% in Q1 of this year.
Trump kind of gave modi a headache and a chance with his second tariffs.
The chance is it gives modi a chance to reform a lot of stuff without any pushback and Indian businessmen who are protectionist are forced to accept the reality that it will not continue like that and they need to open up the market and if not will be left behind.