Archive · 1 Oct 2026
India’s Finance Ministry Sees 7.3% Q2 Growth Amid Risks
India’s Finance Ministry expects the economy to grow by 7.3% in the second quarter of FY27.
This would be slower than the 7.8% growth recorded in the previous quarter.
Many economic indicators still show that businesses are active.
However, some measures, such as e-way bills and manufacturing growth, became weaker.
Services activity improved because businesses received more orders and hired more workers.
The ministry said conflicts, trade problems and disrupted supply chains could make energy and goods more expensive.
It also warned that high interest rates abroad could make it harder for money to flow into India.
Good monsoon conditions may support farming and rural demand, but a strong El Niño could hurt later crops.
Inflation increased in August, especially for food, so policymakers will need to watch prices carefully.
The Ministry of Finance (India) projects 7.3% real GDP growth for Q2 FY27, below the 7.8% recorded in Q1.
High-frequency indicators showed continued activity, but e-way bill generation and manufacturing momentum moderated while services improved.
Industry remained resilient, with July industrial output up 6.7% year-on-year and August manufacturing PMI at 52.8.
The ministry warned that geopolitical tensions, supply-chain disruptions, volatile energy prices and tighter global financial conditions could weaken growth.
August retail inflation rose to 4.82%, while food inflation reached 5.95%, core inflation 4.16% and wholesale inflation 9.92%.
- Who
- The Ministry of Finance (India), Indian policymakers and the Indian economy.
- What
- The ministry’s nowcasting model projects 7.3% real GDP growth for Q2 FY27 while warning of domestic and external risks.
- When
- The assessment was published in the ministry’s September Monthly Economic Review; Q2 FY27 refers to the September quarter.
- Where
- India, amid risks connected to global trade, financial markets, energy prices and supply chains.
- Why
- Growth is continuing, but slower indicators, inflation pressures and geopolitical and financial uncertainty could affect future momentum.
Growth Supports
Risk Concerns
Economic momentum
Growth Supports
The 7.3% forecast, resilient industry, improved services activity and strong exports indicate that growth is continuing.
Risk Concerns
The ministry said growth was proceeding at a more measured pace, with slower e-way bill generation and manufacturing indicators after a strong first quarter.
Agricultural outlook
Growth Supports
More favourable monsoon conditions and kharif sowing near last year’s levels could support agricultural output and rural demand.
Risk Concerns
A strong El Niño could harm the upcoming rabi crop through heat stress and reduced soil moisture, although a positive Indian Ocean Dipole could partly offset the effects.
External conditions
Growth Supports
Higher exports and increased net FDI provide some support, while the ministry expects net FDI to perform better in FY27 than in FY26.
Risk Concerns
Geopolitical tensions, weaponised supply chains, higher crude prices, tighter global financial conditions and uncertainty in India’s trade relationship with the United States could reduce investment and raise inflation.
- Q2 FY27 growth forecast
- 7.3% real GDP growth
- Q1 FY27 growth
- 7.8% in the April-June quarter
- July industrial output
- Industrial production rose 6.7% year-on-year
- August manufacturing PMI
- 52.8
- August retail inflation
- 4.82%, including 5.95% food inflation and 4.16% core inflation
- August wholesale inflation
- 9.92%
- Net FDI
- $13.4 billion during April-July 2026, compared with $9.7 billion a year earlier
- April-August FY27 exports
- Goods and services exports rose 15.5% year-on-year to $399.3 billion
