India economy has once again shown its strong hold. In the second quarter of the current financial year FY26, the country’s GDP has grown at a fast pace of 8.2%, which is the highest level in the last six quarters. This growth was not only higher than expected, but also clearly shows the strength of domestic demand, rural economy and government spending.
GDP growth exceeds expectations, even better than last quarter
GDP growth was 7.8% in the last quarter, but it increased to 8.2% in Q2. Economists had estimated growth at 7.3%, while RBI had estimated it at 7%. Reduction in GST by the government, increase in stocking before festivals and increase in demand again in rural areas emerged as the major reasons behind this growth.
GST rates on essential goods were reduced from September 22. Due to this, there was a rise in the sales of FMCG products like household items and groceries. Finance Minister Nirmala Sitharaman said that with the relief in GST, people will have additional savings of about Rs 2 lakh crore, which will increase spending in the market and bring new energy to the economy. The figures for the second quarter confirm this improvement.
Primary Sector: Agriculture stable, slight decline in mining
The primary sector of agriculture and mining saw an annual growth of 3.1%. The agriculture sector grew at a pace of 3.5%, which is slightly slower than last year. There was almost stability in the mining sector, where a decline of only 0.04% was recorded. At the same time, due to improvement in rural economy and good monsoon, there was strength in farming related activities.
Strong pace in manufacturing and electricity sectors
Meanwhile, the secondary sector, which includes manufacturing and power generation, performed brilliantly. The entire industry grew by 8.1% and the manufacturing sector alone registered a growth of 9.1%. Last year the growth of manufacturing was only 2.2%, so this time the growth is quite a relief.
At the same time, the service sector has also performed strongly. Tertiary sector saw 9.2% growth, trade hotel and transport saw 7.4% growth, financial and real estate services saw 10.2% growth and public administration and defense sectors saw 9.7% growth.
Real reasons for growth
Three main reasons for India’s strong GDP growth emerged. First is improvement in rural economy, second is government capital expenditure and third is increase in exports. Although private investment and urban demand are still slow, domestic consumption is contributing about 60% of GDP, which is a sign of stability.
Leave a Reply