A sharp improvement in manufacturing activity and firm rural demand contributed to the upside, even as economists cautioned that the pace of growth may not sustain over the coming quarters.
The data showed broad-based resilience, with gross value added (GVA) expanding 8.1% against 5.8% a year ago. Manufacturing grew 9.1%, a significant jump from 2.2% last year, while agriculture rose 3.5%. Electricity and construction also supported activity, although the mining sector saw a marginal contraction.
Speaking to CNBC-TV18, Sakshi Gupta, VP and Senior Economist at HDFC Bank, said part of the strength in the second quarter reflected demand ahead of the festive season and an improving rural backdrop. “On the consumption side, there is momentum that has continued to pick up in the second quarter. A part of this is being led by the rural economy,” she said. Gupta noted that government-led capital expenditure remains the main driver of investment, but early signs of private capacity expansion are emerging in certain sectors.
Gupta also flagged that some of the manufacturing boost may fade as festive-season production normalises and tariff-related pressures begin to play out.
Despite the robust headline number, she said the Reserve Bank of India (RBI) may still consider a rate cut. “I would still say it’s a close call,” she said, pointing to forward-looking indicators that suggest softer momentum in the second half.
Kaushik Das, Chief Economist at Deutsche Bank, said the strong GDP print did not come as a surprise given the favourable base and the impact of the GDP deflator. “It was very easy to forecast… If you get your nominal GDP growth right… you would have got that 8% handle,” he said.
Das, however, warned that nominal GDP growth has fallen sharply and could pose challenges for tax collections, corporate earnings and fiscal ratios. He noted that nominal GDP for FY26 may remain below 9%, which “is not a very good story.”
Das expects growth to moderate from here, with estimates for the next few quarters already trending closer to 6–6.5%. He reiterated his view that the RBI should deliver a rate cut in December, arguing that monetary policy must remain forward-looking as high base effects and a normalising deflator could pull real GDP lower.
Sameer Narang, Head of Economic Research Group at ICICI Bank, said several nominal indicators — including credit growth and corporate earnings — are showing signs of improvement. Credit offtake has risen to ₹9.7 lakh crore this year, compared with ₹8.1 lakh crore last year, and vehicle sales remain firm. “It seems that we have bottomed out, and we are gradually seeing an increase in momentum,” he said.
However, Narang cautioned that exports remain a key risk, especially as tariff-related headwinds intensify. Strong domestic demand is expected to support activity, but he said export weakness could limit growth from rising towards 8% on a sustained basis.
The economists agreed that while Q2 GDP reflects a genuinely strong performance supported by manufacturing and rural consumption, the coming quarters may see softer readings as base effects turn less favourable, exports remain weak and nominal growth pressures persist.
Watch accompanying video for entire discussion.
