The latest GDP footprint from India has opened up a new wave of debate, largely because economists didn’t see this momentum coming. According to Ministry of Statistics and Programme Implementation (MOSPI), the economy grew by 8.2 per cent in the second quarter of FY 2025-26, the fastest in six quarters.
Most forecasts, including those of the World Bank and IMF, had placed India closer to 6.7 per cent, making this jump both surprising and significant. It naturally raises the question how did India reach 8.2 per cent? What shifted on the ground? And what does this number really reveal about the state of the economy?
A large part of the answer lies in manufacturing and services, which did the heavy lifting this quarter. Manufacturing saw a sharp rise, partly because companies boosted production ahead of the festive season and in response to GST-related consumption.
Finance, real estate, professional services and transport continued their steady run and provided consistent support.
This is important because India’s growth story has traditionally leaned heavily on services; seeing manufacturing pick up suggests a more balanced recovery is underway.
What also stands out is that this growth is largely driven by domestic demand rather than exports. With global conditions uncertain and many economies moving slowly, India isn’t riding on external demand.
Instead, it is household spending, private investment and sustained government capital expenditure that are holding the economy up. This internal momentum is one reason India can clock such strong numbers even while the global economy remains uneven.
One factor that doesn’t get enough attention in headline inflation or more specifically, the GDP deflator. Real GDP is calculated after adjusting for inflation. When inflation is lower, real GDP automatically looks stronger because the price adjustment is softer.
Over the last few months, India has seen a clear easing in inflation. So, while the 8.2 per cent growth is real, the number is also boosted by the simple fact that prices didn’t rise as much. This doesn’t make the growth artificial, but it does mean that part of the surprise comes from how GDP is measured.
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This naturally leads to the question: has purchasing power actually increased? To some extent, yes. Lower inflation means everyday money stretched a little further. Stronger manufacturing typically signals more jobs and better stability, while the services sector boosts incomes for large sections of the urban workforce. However, it’s equally true that headline GDP numbers don’t always reflect the lived experience of all Indians. Rural demand is recovering more slowly, and informal workers often don’t see the same gains that formal sectors do.
Politically, the response was immediate. Prime Minister Narendra Modi framed the data as proof that reforms and policy stability are working, even taking a jab at Rahul Gandhi who called India a “dead economy.”
Many supporters see this as validation of the governments approach since 2014. Economists, meanwhile, have reacted with what might be called cautious appreciation. Several have called this a ‘blockbuster quarter’ but also flagged that base effects, low inflation and seasonal manufacturing may have amplified the figure.
Nominal GDP, which is not adjusted for inflation grew at around 8-9 per cent, which is healthy but not exceptionally high and some analysts believe growth could moderate as inflation normalises.
Taken together, the 8.2 per cent figure tells us that India’s current momentum is driven by internal consumption and services, boosted by manufacturing, and supported by easing inflationary pressures.
It also highlights the resilience of the economy at a time when global currents are uneven.
But the real test is whether this momentum can hold, whether employment expands, whether rural incomes strengthen and growth reaches beyond the urban middle class.
For now, the numbers speak for themselves. It’s a strong quarter and a reminder that India’s economic story is still unfolding, steady in some places, surprising in others and far more layered than a single headline can capture.
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