Prof Mithilesh Kumar Sinha
Nagaland University, Lumami
India's economic rise continues to attract global interest. As the world's fourth largest economy, the country is confidently navigating its path to becoming the third largest by 2030, with a projected GDP of USD 7.3 trillion. This current phase of growth is indicative of effective policymaking, structural reforms, and India's increasing integration into the global economy.
Gross Domestic Product (GDP) serves as a key indicator of overall economic performance, reflecting the rate of expansion within the country. According to the latest data, India's real GDP, adjusted for inflation, is anticipated to grow by 8.2% in the second quarter of FY 2025-26, and compared to a growth rate of 5.6% in the second quarter of FY 2024-25. In the first quarter of FY 2025-26, the GDP grew by 7.8%, in contrast to a growth rate of 6.5% in the first quarter of FY 2024-25. The nominal GDP has recorded a growth rate of 8.7% in the second quarter of FY 2025-26. Each sector of the economy is crucial to the nation's growth. The primary sector has seen a year-on-year Real GVA growth rate of 3.1% in the second quarter of FY 2025-26. Likewise, the Secondary (8.1%) and Tertiary (9.2%) sectors have contributed significantly to the Real GDP growth rate in the second quarter of FY 2025-26.
The nominal GDP has recorded a growth rate of 8.7% in the second quarter of FY 2025-26. Each sector of the economy is crucial to the nation's growth. The primary sector has seen a year-on-year Real GVA growth rate of 3.1% in the second quarter of FY 2025-26. Likewise, the Secondary (8.1%) and Tertiary (9.2%) sectors have contributed significantly to the Real GDP growth rate in the second quarter of FY 2025-26.
Growth in GDP jumped over due to following reasons:
This GDP growth was driven by strong performance by the secondary (manufacturing and construction) and tertiary (services) sectors. These sectors recorded growth of 8.1% and 9.2%, respectively. This pushed the real GDP growth rate above 8% in the second quarter of 2025-26. These figures show that despite various challenges worldwide (such as the US tariff hike), India remains the world's fastest-growing major economy.
The manufacturing sector, which accounts for 14% of the country's GDP, has seen a robust growth of 9.1%. In the same quarter last year, this growth was only 2.2%. The construction sector also saw growth of 7.2%, slightly lower than the 7.6% growth in the previous quarter. Within the services sector, finance, real estate, and professional services have seen the largest jump of 10.2%. Real Private Final Consumption Expenditure (PFCE), or spending power, has also seen a robust surge. This means people are shopping in droves. It grew by 7.9% in the second quarter of FY 2025-26, compared to 6.4% in the same period last year. This indicates that income and employment are increasing in the economy.
The agriculture and allied sectors achieved growth of 3.5 percent. Meanwhile, the electricity, gas, water supply, and other utility services sectors registered growth of 4.4 percent in the second quarter. Inflation has reached historically low levels and remains well below the target. This decline is due to lower food prices and reduced GST rates. Furthermore, the base effect has been favorable compared to last year. Financial conditions remain normal, and corporate financial resources have increased significantly compared to last year.
Summing up, India’s economy is progressing on a stable and resilient growth path, supported by structural reforms, digital transformation, and a strong focus on inclusive development. With international organisations’ confidence in the growth trajectory of India and stable macroeconomic indicators, the economy is well positioned to sustain its economic momentum. With the RBI’s continuous monitoring of inflation and recent policy measures—such as streamlined tax structures, labour-centric reforms, and trade-promotion initiatives—the government’s governance efforts are helping ease compliance, reduce costs, and support broader participation across sectors. Together, these developments indicate steady progress towards a more productive, competitive, and people-centric economy, aligned with long-term sustainable growth
