New Delhi, October 1 (Daily Kiran) : The Indian economy is poised for a robust performance, with the Finance Ministry estimating a 7.3% growth rate for the second quarter of the fiscal year 2026-27. This projection, detailed in the ministry’s September “Monthly Economic Review,” comes despite rising global uncertainties.
The report indicates that the momentum seen in the first quarter, where India recorded a remarkable 7.8% GDP growth, is expected to continue, albeit at a more balanced pace. This growth is attributed to strong performances across manufacturing, construction, and services sectors, supported by domestic demand and increased investment.
The ministry highlighted that ongoing conflicts in West Asia have impacted global energy markets and trade routes, putting pressure on various economies worldwide. However, India’s ability to maintain its growth trajectory is notable, especially as the first quarter’s performance marked the highest level for any first quarter in the current series.
Investment rates have reached their highest levels, providing a solid foundation for economic growth. Timely government interventions to ensure energy supply and availability of key raw materials have played a crucial role in shielding the economy from external shocks. The limited impact of international energy prices on domestic fuel costs has also helped sustain economic activities.
While some high-frequency indicators, such as e-way bill generation and manufacturing PMI, showed a slight slowdown, the service sector experienced a boost in August, driven by new business and job growth. Additionally, electricity and fuel consumption have consistently shown healthy growth, and bank lending remains strong, signaling robust economic activity.
The industrial sector performed well in the first quarter, registering a 7.7% increase in real Gross Value Added (GVA), with manufacturing contributing significantly at 9.2%. Recent data reveals a 6.7% rise in the Industrial Production Index (IIP) for July, while the core sector index grew by 4.8%, indicating continued expansion.
The report also noted a surge in bank lending to the industrial sector, with growth observed across companies of all sizes. Recent policy measures aimed at strengthening domestic capabilities in the electronics and semiconductor value chains are showing positive effects.
On the inflation front, the Finance Ministry acknowledged rising global oil prices and weather-related volatility as factors contributing to price pressures at retail, wholesale, and producer levels. Nevertheless, the overall inflation outlook remains controlled, with nearly 69% of items in the consumer price index basket still below the 4% target.
Regarding exports, the review stated that India’s total export value is on track to reach approximately $400 billion in the first five months of the current fiscal year. If this trend continues, total exports could approach the $1 trillion mark by year-end. The ministry emphasized that the free trade agreements (FTAs) established by India are facilitating export growth and creating new global opportunities for Indian products.
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