India's GDP Expected to Grow 7.2% in Q2 FY26, Fuelled by Private Consumption: Report

India Ratings & Research (Ind-Ra) has projected India’s real Gross Domestic Product (GDP) growth at 7.2% for the second quarter (Q2) of FY26, citing strong private consumption as the primary driver. 

This projection follows the April–June quarter’s growth of 7.8%, the fastest pace in five quarters. The National Statistics Office (NSO) will release the official GDP figures for Q2 FY26 on November 28.

Private Consumption Leads Growth Momentum

According to Ind-Ra, private consumption is the leading contributor to GDP expansion, supported by steady real income growth across income groups. The agency expects private consumption to have grown 8% year-on-year in Q2 FY26, compared with 7% in Q1 and 6.4% in Q2 FY25. 

Record-low inflation, stable rural wage growth, and income tax cuts from the FY26 budget have bolstered consumption demand, pushing it to a three-quarter high.

Strong Sectoral Performance Supports Growth

From the supply side, a resilient services sector and favourable base-led growth in manufacturing and goods exports have strengthened overall GDP performance. Ind-Ra highlighted that lower input costs provided additional support to growth despite global economic volatility. 

The agency noted that India’s economy has navigated global headwinds effectively due to strong domestic demand and easing retail inflation.

Read More: India’s Energy Demand Expected to Grow 5% with 7% GDP Expansion: HPCL CMD!

Nominal GDP and Fiscal Concerns

Ind-Ra pointed out that while real GDP growth remains robust, nominal GDP growth may have slipped below 8% year-on-year during Q2 FY26. This decline is beginning to reflect in the moderation of government tax collections. 

The agency cautioned that sustained weakness in nominal growth could pose fiscal challenges in the coming quarters, despite encouraging real growth indicators.

Healthy Investment Demand

The report also estimated investment demand growth at 7.5% year-on-year in Q2 FY26. Government capital expenditure continues to play a critical role in supporting investment momentum amid global uncertainty. Ind-Ra observed that steady public spending has offset external pressures and supported economic stability through the first half of FY26.

Conclusion

Ind-Ra’s projection of 7.2% GDP growth for Q2 FY26 reflects the Indian economy’s resilience, powered by domestic consumption, strong government spending, and lower inflation. While the real growth outlook remains optimistic, slowing nominal GDP growth and fiscal challenges warrant close monitoring as India moves through the remainder of FY26.

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