According to economists, India's GDP could rise by 7-8% in Q2FY26 due to a favorable foundation, robust government spending, urban demand, and a resurgence of rural spending. The economic landscape seems optimistic but cautious with the release of the major data collection.
Many were taken aback by India's GDP growth in the first quarter of the fiscal year, which reached a five-quarter high of 7.8%. The GDP may expand by 7% to 8% in the second quarter, which is higher than the RBI's 7% forecast for Q2FY26. However, since nominal GDP growth—economic expansion before accounting for inflation—may have slowed even more, it might not be able to improve market mood.
In Q1FY26, nominal GDP growth fell to a three-quarter low of 8.8%. Experts predict that it might drop to 8% in Q2.
Strong government spending, a positive base effect, and muted deflator rise, according to experts, could serve as statistical growth drivers for the GDP figures from the second quarter. Furthermore, because front-loading of exports persisted during the quarter, the effects of 50% US tariffs on Indian goods did not completely manifest.
However, when statistical drivers begin to wane, GDP figures may be lower in the second half of FY26. Delays in an India-US trade agreement will also have an impact on statistics as a result of US tariffs.
On Friday, November 28, the Q2FY26 GDP statistics will be made public.
Q2 GDP: Nominal GDP will be the focus; strong prints are anticipated.
The majority of economists predict GDP prints for Q2FY26 to be between 7% and 8%. A Mint poll indicates that GDP growth in Q2 most likely remained at 7.2%. India's GDP is expected to rise by about 7.5% during the quarter, according to State Bank of India.
According to Manoranjan Sharma, Chief Economist of Infomerics Ratings, India's Q2 GDP might be between 7 and 7.2% due to steady public-sector investment, a significant increase in rural expenditure, and firming urban demand ahead of the holiday season.
Sharma emphasized that, at 55–60% of GDP, spending continues to be the key driver of economic growth.
According to Sharma, the cycle of spending is expanding due to improved balance sheets and growing salaries.
"After a few subdued years, the 7.7% year-over-year increase in rural demand in Q2—the fastest in 17 quarters—marks a significant turnaround. In both urban and rural markets, sentiment has improved due to softer inflation, better credit availability, and strong holiday deals in cars, appliances, and electronics. E-way bill production has increased by 26%, and GST receipts are approaching ₹1.9 lakh crore, according to high-frequency indicators that reflect this trend, according to Sharma.
Economists from Union Bank of India predict that GDP figures for Q2FY26 would be 7.5%.
Though slightly slower than 7.6% in Q1, GVA growth for Q2FY26 most likely rose to 7.3% from 5.8% in Q2FY25. According to Union Bank of India, nominal GDP growth probably dropped even more to 8% from 8.8% in Q1 and 8.3% in the same time previous year.
However, Namrata Mittal, Chief Economist at SBI Mutual Fund, thinks that India's Q2 GDP figures may be little higher.
In contrast to 7.8% in Q1 FY26 and far higher than the RBI's forecast of 7% for the quarter, Mittal anticipates real GDP growth in Q2 FY26 to increase to 8% year over year.
However, Mittal noted that although real growth seems strong, nominal GDP is predicted to be only 8.5–9% in Q2 (compared to 8.8% in Q1), much below India's target range of 11–12%.
"Growth has been strongly supported by the frontloading of government spending, especially at the central level. However, it's crucial to remember that the statistical depiction of real growth may have been skewed by extraordinarily low CPI and WPI inflation.
0 Comments