India’s real (gross domestic product) GDP growth is estimated to have grown by 7.35% year-on-year in the second quarter of FY27, according to the Monthly Economic Review (MER) of Finance Ministry released on October 29, 2026. The Q2 FY27 GDP growth estimate, based on the ministry’s nowcasting model, indicates continued economic expansion, supported by domestic demand, investment activity and structural reforms.
Key Highlights
- The Finance Ministry estimates India’s Q2 FY27 GDP growth at 7.35%, following 7.8% expansion in Q1.
- Domestic demand, infrastructure investment and manufacturing activity are expected to support growth despite geopolitical and energy-related risks.
The projected growth follows the 7.8% expansion recorded in the first quarter of FY27. The Q2 FY27 GDP growth estimate, however, comes after a slowdown in the pace as the world is dealing with geopolitical worries, currency issues and global economic uncertainty.
The ministry of Statistics and Programme Implementation is expected to release official GDP figures of the July – September quarter on November 30, 2026.
Finance Ministry Projects 7.35% GDP Growth in Q2 FY27
The nowcasting model prepared by the Finance Ministry has projected real GDP growth of 7.35% in Q2 FY27, down from 7.8% in Q1. The growth rate has slowed, but the economy is expected to grow at a rate still higher than 7%.
Domestic demand, investment activity and structural reforms are likely to continue to drive growth in FY27 as per Monthly Economic Review.
The report also recognized risks arising from the continued geopolitical tensions, energy price volatility and tightening global financial conditions. It said India would continue to face these difficulties but still be well placed to continue its economic growth in the second half of the current fiscal year.
Industrial Activity and Investment to Support India’s Economic Growth
The near-term prospects of the industrial sector remained robust with strong production, order flows and manufacturing sentiment, the Finance Ministry said.
The Reserve Bank of India's assessment in October also pointed to factors that will continue to drive investment activity, such as robust demand from capacity utilisation, good credit flows and the government's ongoing push for investment in infrastructure.
The report, however, warned the manufacturing costs and investment decisions could be impacted by energy price uncertainty, supply-chain pressures and geopolitics.
Policy support will be needed to convert momentum in industry to increased production scale and increased value addition and competitiveness at home and abroad, the review said.
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Inflation, Energy Prices and Global Risks Remain Key Concerns
Inflation prospects in the short-term would rely on domestic food supply management, energy price movements in the global markets and conditions of systemic liquidity, the Monthly Economic Review said.
The geopolitical risks and the volatility in the energy markets continue to be relevant threats to India's economic prospects as they could impact production costs, supply chains and business investment decisions.
The report highlighted the need to continue to support the growth of industries while fostering its manufacturing capacities and competitiveness to drive economic expansion in the long term.
India’s External Position Remains Stable Amid Global Uncertainty
Despite the challenging global environment, the Finance Ministry said India’s external position remained stable. A comfortable foreign exchange reserve buffer and upward revisions to national growth projections were cited as factors supporting the country’s economic resilience.
The review noted that India's economic fundamentals offered a base for dealing with the external uncertainties while ensuring sustainable long-term growth.
Domestic demand, infrastructure investment, manufacturing activity and management of external risks will continue to play a significant role in India's GDP growth during the course of the fiscal year.
