Archive · 1 Dec 2025
India's Robust GDP Growth Amid Inflation Concerns
India's economy grew really fast at 8.2% in the second quarter of the year, which is even better than what experts thought.
This means the whole year's growth might be around 7.5%.
The growth was helped by good performance in manufacturing and services.
However, there are some concerns.
The growth in nominal terms (which includes inflation) is slower, and the government's budget might be affected because of this.
Also, the government needs to spend less to keep the deficit under control.
There are uncertainties about how GST cuts and US tariffs will affect the economy in the future.
Overall, while the growth is good, there are things to watch out for in the coming months.
India's GDP grew at 8.2% in the second quarter of 2025-26, surpassing expectations and leading to a revised annual growth projection of around 7.5%.
Manufacturing and services sectors showed robust growth, with manufacturing growing at 9.1% and services driven by financial, real estate, and professional services.
Nominal GDP growth slowed to 8.8% in the first half of the year, below the budgeted 10.1%, which could impact tax collections and fiscal deficit targets.
Government consumption expenditure was a drag on growth, with the Centre's non-interest non-subsidy revenue expenditure declining by 6.4% during April-October.
Uncertainties remain about the impact of GST rate cuts, US tariffs, and upcoming dataset revisions in early 2026 on the economy.
- Who
- Indian Government and Reserve Bank of India (RBI)
- What
- India's GDP growth and inflation targeting regime
- When
- Second quarter of the financial year 2025-26
- Where
- India
- Why
- To assess economic performance and inflation control measures
- GDP Growth Rate (Q2 2025-26)
- 8.2%
- GDP Growth Rate (H1 2025-26)
- 8.0%
- Manufacturing Growth (Q2 2025-26)
- 9.1%
- Services Sector Growth (Q2 2025-26)
- Robust
- Nominal GDP Growth (H1 2025-26)
- 8.8%
- Budget Assumed Nominal GDP Growth (2025-26)
- 10.1%
- Fiscal Deficit Target (2025-26)
- 4.4% of GDP
- RBI's Projected Annual Growth
- 6.8%
Sources
Inflation targeting and beyond
Why the RBI MPC is likely to maintain status quo for a third consecutive time
Schrodinger’s economy: Rising and slowing at the same time
The Indian economy’s 8.2% second-quarter growth: Can it expand at such a brisk pace for years to come?
GDP growth is robust, GST cuts and US tariffs will shape momentum
MPC meeting: RBI could cut repo rate by 25 bps in December meeting, say economists
