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India Q2 FY27 Growth Seen At 7.3% Amid Risks
India’s Finance Ministry expects the economy to grow by 7.3% in the second quarter of FY27.
This is slightly slower than the 7.8% growth recorded in the previous quarter.
Some business activity indicators, such as e-way bills and factory surveys, weakened.
Services activity improved because businesses received more new orders and hired more workers.
The ministry said tensions between countries and changes in trade rules could hurt growth.
It also warned that higher oil prices could make goods more expensive.
Weather conditions, including a possible strong El Niño, could affect winter crops.
Foreign investment increased during April-July 2026 compared with the same period a year earlier.
Inflation rose in August, especially for food, and the ministry expects several risks to remain.
The Finance Ministry’s nowcasting model projects 7.3% real GDP growth for India in Q2 FY27.
The forecast follows 7.8% real GDP growth recorded in the April-June quarter.
E-way bill generation and manufacturing PMI growth moderated, while services activity improved in August.
The ministry warned that geopolitical, trade and financial uncertainties could weaken economic momentum.
Retail inflation rose to 4.82% in August, while food inflation reached 5.95% and wholesale inflation 9.92%.
- Who
- India’s Finance Ministry and the Indian economy.
- What
- A Finance Ministry model projects 7.3% GDP growth for Q2 FY27, alongside warnings about slower momentum and inflation risks.
- Where
- India, with risks linked to global trade, financial markets and geopolitical conditions.
- When
- The assessment appeared in the ministry’s September Monthly Economic Review; the forecast concerns Q2 FY27, and investment data cover April-July 2026.
- Why
- The estimate reflects continued economic growth, while weaker high-frequency indicators and external risks could affect the outlook.
Growth Outlook
Risk Outlook
Economic momentum
Growth Outlook
The nowcasting model indicates that India’s economy will continue expanding at a strong 7.3% pace in Q2 FY27, while services activity improved in August.
Risk Outlook
The ministry said momentum had moderated, citing slower e-way bill generation and manufacturing PMI growth after the strong first quarter.
External conditions
Growth Outlook
Net foreign direct investment is expected to perform better in FY27 than in FY26, and net FDI rose during April-July 2026.
Risk Outlook
Geopolitical tensions, uncertainty in India’s trade relationship with the United States, tariff risks and competition for investment could weigh on growth.
Inflation outlook
Growth Outlook
A favourable Indian Ocean Dipole could partly offset the effects of a strong El Niño on the Rabi crop.
Risk Outlook
Climate conditions, higher crude oil prices, geopolitical tensions, festive demand and rising input costs could increase inflationary pressure.
Key facts
- Q2 FY27 growth forecast
- 7.3% real GDP growth
- Previous-quarter growth
- 7.8% in April-June
- August retail inflation
- 4.82%
- August food inflation
- 5.95%
- August core inflation
- 4.16%, up from 3.86% in July
- August wholesale inflation
- 9.92%
- Net FDI
- $13.4 billion in April-July 2026, compared with $9.7 billion a year earlier
- Gross FDI
- $43.9 billion during April-July 2026
Sources
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