India’s GDP Growth Pegged at 7.35 pc in Q2 FY27, Finance Ministry Sees Strong Economic Momentum

New Delhi, Oct 30: India’s economy is estimated to have expanded by 7.35 per cent during the July-September quarter of the current financial year (FY27), driven by robust domestic demand, rising consumption and improved industrial performance, according to the Finance Ministry’s latest Monthly Economic Review.

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The estimate, generated through the ministry’s nowcasting model, indicates that the Indian economy has maintained a strong growth trajectory, although the projected expansion is slightly lower than the 7.8 per cent growth recorded in the April-June quarter.

The October review noted that several high-frequency economic indicators showed encouraging performance during the second quarter, pointing towards sustained economic activity across major sectors.

GST Collections, Automobile Sales Boost Growth Outlook

The Finance Ministry highlighted improved performance in key economic indicators, including industrial production, electricity consumption, port activity, Goods and Services Tax (GST) collections and automobile sales.

Gross GST collections registered growth of approximately 15 per cent during the July-September quarter, significantly higher than the 8.4 per cent increase recorded in the previous quarter.

The automobile sector also witnessed strong momentum, with domestic vehicle sales rising by around 25 per cent year-on-year. The increase was supported by healthy demand across both rural and urban markets.

According to the review, these indicators reflect the resilience of domestic economic activity and the continued strength of consumption demand.

Manufacturing and Services Activity Improve

The report also pointed to a recovery in business activity towards the end of the September quarter, with manufacturing and services sectors showing signs of improvement.

The Purchasing Managers’ Index (PMI) readings strengthened in September, indicating improved business conditions and a more favourable operating environment.

The Finance Ministry observed that the recovery in PMI indicators, alongside improving business sentiment, offered a cautiously positive outlook for the coming months.

Domestic Demand to Support Growth in FY27

Looking ahead, the ministry expects domestic consumption, investment activity and ongoing structural reforms to remain important drivers of India’s economic expansion during the remainder of FY27.

Healthy credit growth and recently concluded trade agreements are also expected to provide additional support to consumption, investment and export activities.

The review suggested that sustained demand and improving business conditions could help maintain the economy’s growth momentum in the coming quarters.

Global Risks Remain a Concern

Despite the positive domestic outlook, the Finance Ministry cautioned that external economic uncertainties could create challenges for India’s growth prospects.

Rising crude oil prices, geopolitical tensions and persistent inflationary pressures remain key risks that could affect economic stability and business confidence.

The ministry noted that these global developments will require close monitoring even as domestic economic fundamentals continue to provide support.