India's Economy Roars: 7.2% GDP Growth Expected, Private Consumption Leads the Charge!

India Ratings & Research (Ind-Ra) projects India's Gross Domestic Product (GDP) to grow by a robust 7.2% year-on-year in the second quarter of fiscal year 2025-26 (July-September). The primary driver for this expansion is expected to be private consumption, which Ind-Ra forecasts to grow by 8%. This surge in consumption is supported by steady real income growth, benefits from income tax cuts, and a favorable base effect combined with record low inflation. On the supply side, the resilient services sector and strong goods exports are propelling manufacturing growth. This projection builds on an estimated 7.8% GDP growth in the April-June quarter of FY26. While real GDP growth appears strong, Ind-Ra highlights a concern over nominal GDP growth potentially slipping below 8%, which could affect government fiscal planning. Investment demand is also estimated to have grown at a healthy pace of 7.5%.

Impact: This strong economic outlook generally supports the Indian stock market, indicating a positive environment for corporate performance and investor sentiment. Rating: 8/10

Difficult terms: Gross Domestic Product (GDP): The total monetary or market value of all the finished goods and services produced within a country during a specific period. Nominal GDP Growth: This measures economic growth in current prices, without accounting for inflation. It represents the total value of goods and services produced at current market prices.