Indias Economy Shows Resilience with Projected 7.35% GDP Growth in Q2
Indias GDP is expected to grow by 7.35% in Q2 FY27, driven by strong industrial output and consumption, according to the Finance Ministry.
New Delhi, October 29 (Daily Kiran) : The Indian economy is maintaining its momentum, with the Finance Ministry projecting a GDP growth of 7.35% for the second quarter of fiscal year 2027. This information was released in the ministry’s monthly review for October.
The report highlights that robust industrial production, energy consumption, port traffic, GST collections, and automobile sales are bolstering the country’s GDP growth, indicating strong domestic consumption.
Following a real GDP growth of 7.8% in the first quarter of FY27, the economic survey anticipates a slowdown to 7.35% in the upcoming quarter, as per the department’s forecasting model presented for 2025-26.
Industrial activities remained strong during the July-September quarter. The Index of Industrial Production (IIP) recorded an 8% year-on-year increase in August 2026, primarily driven by a 9% rise in the manufacturing sector. Additionally, the Index of Core Industries (ICI) showed a 7.9% annual growth in September. The HSBC India Manufacturing PMI rose from 52.8 in August to 55.1 in September, reflecting a significant expansion in manufacturing activities.
The review from the Finance Ministry noted that recent policy initiatives, investments, and changes at the corporate level suggest ongoing efforts to enhance manufacturing, localization, and technical capabilities. To further broaden the manufacturing base, it will be crucial to scale up operations, increase domestic value addition, strengthen supply chains, and maintain competitiveness in exports.
Despite rising global uncertainties, India’s external sector remained robust in September 2026, with total exports of goods and services increasing by 11% year-on-year. This growth was largely driven by a 23.1% rise in goods exports, particularly in electronics and engineering products.
Moreover, India’s external position is supported by a healthy foreign exchange reserve, which stood at $721 billion as of October 16, 2026.
The financial sector also demonstrated resilience during this period. The increase in global sovereign bond yields and fluctuations in equity markets had minimal impact. The money market operated smoothly, with market rates closely aligned with the policy repo rate, and additional liquidity was effectively managed through Open Market Operations (OMO). Bank credit growth remained strong, rising by 21.6% year-on-year.
According to the review, the impact of recently raised interest rates on curbing inflation will depend on the central bank’s active management of liquidity in the coming months.
