Finance Ministry Estimates India’s Q2 FY27 GDP Growth at 7.35%

According to the Finance Ministry’s economic report, which was released on October 29, 2026, the real gross domestic product (GDP) growth has been estimated to be at 7.35% in the second quarter of the fiscal year 2026-27 (Q2 FY27). The estimate comes after the previous quarter, when the growth was 7.8%. The estimate uses industrial production, fuel consumption, port movement, GST revenues, and car sales among others as its indicator. Global inflation rates, prices of crude oil, and political instability have been mentioned as risks to the Indian economy.

What Does the 7.35% GDP Growth Estimate Imply?

The 7.35% growth estimate is a nowcast rather than the official growth of GDP for Q2 FY27. The nowcast gives an early indication of the economy’s performance based on the indicators collected during or just after the end of the quarter.

The Department of Economic Affairs presented the new nowcasting framework in the Economic Survey of 2025–26. According to the latest estimation, the economy has grown at more than 7% in the Q2 of 2026 but at a lower level than the previous quarter of April-June.

About Nowcasting

Nowcasting is the estimation of the economic performance at present time prior to the release of official figures using real-time indicators such as electricity consumption, GST receipts, manufacturing, and vehicle sales.

Nowcasting is different from normal forecasting since nowcasting uses recent past performance to make a judgment of current economic performance rather than estimate the performance for the near future.

Factors Driving India’s GDP Growth

According to the Finance Ministry, the following indicators helped drive economic activity in Q2 FY27.

• Manufacturing: Increase in manufacturing activity contributed to economic growth.
• Energy consumption: Consumption of the electricity and fuel provided signs of the ongoing economic activity.
• GST receipts: Receipts provided information on production and transactions.
• Port activity: Port activity was a sign of ongoing trading activities.
• Sales: Vehicle sales were a reflection of the consumer demand.
• Domestic demand and investment: High credit growth, investments, and reforms are likely to boost economic growth for the remaining quarters of FY27.

Inflation and Risks to India’s Economy from the Global Environment

Although an optimistic outlook for growth was provided, the Finance Ministry pointed out some risks that could impact economic activities in the rest of FY27.

1. West Asia Situation and Crude Oil Price

• Geopolitical tensions in West Asia have caused uncertainties in the energy market. An increase in crude oil prices may lead to a higher import cost, higher cost of transportation and production, and inflation.

2. Food Inflation and El Niño Phenomenon

• Food prices in India are very much influenced by the production, weather conditions, and supply chain interruptions.
• The ministry pointed out various ways to relieve inflationary pressure such as supply of onions through the “Kanda Express”, stock holding restrictions for sugar traders, and reduction of Basic Customs Duty on crude edible oils.

3. Monetary Policy and Liquidity Management

• The success of the recent interest hike of the RBI in controlling the secondary effects of the inflation will be determined partially by liquidity management.
• Interest rate hikes are effective in curbing inflation, but it is also increases the cost of borrowing.