India’s Economic Ascent Accelerates: GDP Surges to 8.2% in Q2, Inflation Hits Record Low

8.2% GDP: India’s Growth Story Strengthens

Robust GDP Growth, Steady Inflation, Strong Production, and Rising Exports Support India’s Growth Narrative

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New Delhi: India’s economic ascent continues to capture global attention. Already the world’s fourth largest economy, the nation is charting a confident course toward becoming the third largest by 2030, with GDP projected at USD 7.3 trillion. The current growth phase reflects the strength of decisive policymaking, structural reforms, and India’s deepening global integration.

With growth accelerating, India has once again outpaced global peers, reinforcing its position as the fastest-growing major economy. The surge is supported by resilient domestic demand, moderating inflation, and higher labour force participation. A revival in domestic investment and strong investor sentiment signals a stable and broad-based economy. As reforms gather pace and consumption remains optimistic, India’s economic outlook continues to upbeat, signalling sustained momentum and growth across sectors.

Key Economic Indicators: Steady Growth of India  

Robust GDP Growth   

Gross Domestic Product (GDP) is one of the primary indicators of overall economic performance which reflects the rate at which the country is expanding. As per the latest data, the real GDP of India, adjusted for inflation, is estimated to grow by 8.2% in Q2 of FY 2025-26 against the growth rate of 5.6% during Q2 of FY 2024-25. The GDP in Q1 of FY 2025-26 grew at 7.8% against the growth rate of 6.5% during Q1 of FY 2024-25. Nominal GDP has witnessed a growth rate of 8.7% in Q2 of FY 2025-26. Each sector of the economy is playing a pivotal role in the growth of the country. Primary sector experienced the year-on-year Real GVA growth rate of 3.1% in Q2 FY 2025-26. Similarly, the Secondary (8.1%) and Tertiary Sector (9.2%) have boosted the Real GDP growth rate in Q2 of FY 2025-26.

Inflation Shows Stability   

India’s inflation trajectory in October 2025 reflects a remarkable softening, underscoring the economy’s robust fundamentals and effective price management measures. Headline inflation, measured by the Consumer Price Index (CPI) eased to 0.25% over the previous year, marking the lowest level recorded in the current CPI series. The inflation remains well within the tolerance band of RBI. The moderation in inflation is consistent with the RBI’s decision to maintain the repo rate at 5.50% with a neutral stance, reflecting confidence in price stability and growth prospects.

The decline was primarily driven by a sharp moderation in food inflation (CFPI), which registered at (-)5.02% over October, 2024, supported by easing prices of oils and fats, vegetables, fruits, egg, cereals and products. The trend also reflects the positive impact of recent decline in GST rates.

Growing Index of Industrial Production (IIP)

IIP measures growth in manufacturing, mining, and electricity, reflecting the strength of industrial activity. India’s IIP registered a robust growth of 4.0 % year on year in September 2025, driven primarily by a 4.8 % expansion in the manufacturing sector. A rising IIP signals robust production, higher employment, and stronger investment momentum, reinforcing the economy’s overall growth trajectory.

Top three positive contributors responsible for the strong performance are from the Manufacturing Sector. The performance underlines the strength of India’s industrial base and its capacity to contribute meaningfully to the broader growth agenda.

• Manufacture of Basic Metals (growth of 12.3 %),
• Manufacture of Electrical Equipment (growth of 28.7 %), and
• Manufacture of motor vehicles, trailers and semi-trailers (14.6%)

upturn that strengthens the foundation for sustained, inclusive economic expansion.

Robust Employment Growth  

A strong labour force is vital for economic growth as it drives production, innovation, and consumption across sectors. The fuel of the economy, the labour market continues to show encouraging signs of resilience in October, 2025. The overall Labour Force Participation Rate (LFPR) in CWS (currently weekly status) for persons of age 15 years and above reached 55.4% in October 2025, recording a 6-month high level from 54.2% in June 2025. Other labour market indicators like worker participation rate (52.5%, rising since June 2025), female participation (34.2%, highest since May 2025) and unemployment rate (unchanged at 5.2% since September 2025) also witnessed an improvement. Additionally, the Employee’s Provident Fund Organization (EPFO) recorded addition of 21.04 Lakh Net Members during July 2025, growth of 5.55 % in net payroll additions compared to July 2024. This increase in new subscribers showcase growing employment opportunities, increased awareness of employee benefits, and EPFO’s successful outreach programs.

The enhanced employment trends show rising incomes, stronger job security, and improving job quality, reflecting the positive impact of economic growth and policy measures. Together, they signal more inclusive employment gains that enhance productivity and support sustainable economic expansion.

Trade Performance Improves   

India’s trade sector remained robust in April–October 2025, reflecting strong global demand and steady improvements across key export categories. Both merchandise and services exports recorded healthy growth, reinforcing the economy’s resilience amid global uncertainties.

India’s external sector continued to show strength in April–October 2025, with cumulative exports (merchandise and services) rising by 4.84% to USD 491.80 billion, compared to USD 469.11 billion a year earlier.

Merchandise exports grew by 0.63% to USD 254.25 billion, supported by strong demand from key markets such as Spain (40.74%), China (24.77%), Hong Kong (20.7%), USA (10.15%), and UAE (5.88%), despite global trade disruptions. The growth was supported by robust performance in:

• Marine Products (16.18%)
• Meat, dairy & poultry products (23.97%)
• Other cereals (25.52%),
• Cashew (28.32%),
• Electronic Goods (37.82%)

Services exports remained a major pillar of resilience, expanding by 9.75% to an estimated USD 237.55 billion in April-October 2025 from USD 216.45 Billion in April-October 2024, underscoring India’s growing global competitiveness in computer services and business services. Overall, the export sector continues to reinforce India’s economic stability and growth outlook.

Success of GST 2.0

The Government launched comprehensive GST ( Goods & Services Tax) reforms, introducing rate rationalisation with a simplified two-slab structure of 5% and 18%. The reform features sweeping rate reductions across key sectors, focusing on common man goods, labour intensive industries, agriculture, and healthcare, which serve as vital drivers of the economy.

Gross GST collections for October 2025 stood at ₹1.96 lakh crore, marking a 4.6% increase over ₹1.87 lakh crore recorded in the same month last year. The uptick in revenue, coinciding with the onset of rate rationalisation, underscores resilient consumption trends during the festive season.

The reduction in GST rates has lowered the cost of goods and services, boosting household savings and consumption, while expanding the tax base. At the same time, a broader tax base is aiding stable revenue trends, contributing to a more balanced and sustainable growth environment.

India’s Growth Projections  

India’s growth outlook continues to strengthen, with major global and domestic institutions upgrading their projections in recognition of the economy’s resilience and expanding domestic demand. The RBI has revised its FY 2025–26 GDP forecast upward from 6.5% to 6.8%, reflecting robust momentum across sectors. International agencies echo this optimism too.

• The World Bank projects 6.5% growth in 2026, citing strong consumption and the positive effects of GST reforms;
• Moody’s expects India to remain a growing G20 economy through 2026 with growth rate of 6.4% and 6.5% in 2027;
• The IMF has boosted its projections to 6.6% for 2025 and 6.2% for 2026.
• The OECD has raised growth forecasts to 6.7% for 2025 and 6.2% for 2026.
• The S&P anticipate that India’s GDP will grow by 6.5% in fiscal year 2026 and 6.7% in 2027.

Together, these revisions highlight broad international confidence in India’s economic fundamentals and its ability to sustain strong, domestically driven growth despite evolving global challenges.      

Conclusion

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.

Source: PIB Delhi