India Economic Growth Climbs To 8.2%, Strongest Since Early 2024

(RTTNews) - The Indian economy grew at the fastest pace in six quarters during the three months to September, defying expectations for a modest slowdown, amid strong outcomes in manufacturing, construction and services as well as due to further strengthening of private consumption.

Gross domestic product rose 8.2 percent year-on-year following a 7.8 percent expansion in the June quarter, preliminary data from the statistics ministry showed Friday. Economists had forecast a slower growth of 7.3 percent. In same quarter of the previous year, growth was 5.6 percent.

The latest pace of growth was the strongest since the March quarter of 2024, when the economy grew 8.4 percent.

On the production side, Manufacturing growth increased to 9.1 percent from 7.7 percent. Construction sector expanded 7.2 percent, which was slightly slower than the 7.6 percent gain in the previous three months.

Growth in the financial, real estate and professional services sector rose to 10.2 percent from 9.5 percent.

Farm sector growth slowed to 3.5 percent from 3.7 percent, while the utilities industry expansion surged to 4.4 percent from 0.5 percent.

Breakdown of data on the expenditure side showed that the private consumption growth increased to 7.9 percent from 7.0 percent. Reduction in the goods and services tax during the quarter boosted spending. State spending shrank 2.7 percent after strong growth in the previous quarter.

Gross fixed capital formation growth slowed to 7.3 percent from 7.8 percent. Exports growth eased to 5.6 percent from 6.3 percent as the country faces one of the highest tariffs on shipments to the U.S. Import growth improved to 12.8 percent from 10.9 percent.

During the April to September period, GDP rose 8.0 percent year-on-year compared to 6.1 percent in the same period a year ago.

The gross value-added rose 8.1 percent year-on-year in the September quarter following 7.6 percent growth in the previous three months. GVA was 7.9 percent higher in the April to September period versus 6.2 percent in the same period last year.

In October, the Reserve Bank of India forecast GDP growth for the financial year 2025-26 at 6.8 percent, which was revised up from 6.5 percent estimated in August. However, the bank said growth is likely to be slightly slower than previously projected going forward due to the higher trade tariffs.

The International Monetary Fund-raised India's growth projection for this fiscal year ending March 31, 2026, by 0.2 points to 6.6 percent, while the forecast for next fiscal was trimmed by the same amount to 6.2 percent.

Economists at HDFC Bank raised their GDP growth forecast for the fiscal year 2025-26 to 7.3 percent from 6.8 percent, citing the strong September quarter data and on the hope of a favorable trade deal before the end of 2025.

Low base and inflation explain part of the story of why these numbers are so high but not entirely, HDFC Bank Principal Economist Sakshi Gupta said in a post on LinkedIn. While acknowledging the upbeat growth data thus far, the economist pointed out that there remain headwinds that are yet to play out.

Low nominal growth rates - 8.7 percent in the September quarter after 8.8 percent in the June quarter, signal a need for caution, Gupta added.

HDFC Bank economists see a chance for a 25-basis points interest rate cut in the upcoming RBI policy meeting in December due to lingering risks to growth and expectations for inflation to remain below the 4 percent target until the September quarter next year.