New Delhi [India], November 27 (ANI): India’s economic growth is expected to come in strong for the second quarter of the current financial year, with GDP likely to rise 7.5 per cent, according to a report by Union Bank of India.
This would be significantly higher than the 5.6 per cent growth recorded in the same quarter of the previous financial year. The official GDP data for the 2nd Quarter (Q2) of the financial year 2026 (FY26) will be released on November 28.
The report stated “GDP data for Q2 FY26….. likely clocked 7.5 per cent, sharply higher from the same period previous year (Q2 FY25: 5.6 per cent) but lower than 7.8 per cent clocked in the previous quarter”
Gross Value Added (GVA) growth for Q2 FY26 is also expected to increase to 7.3 per cent, compared to 5.8 per cent in Q2 FY25, although it remains below the 7.6 per cent expansion seen in Q1.
The report highlighted that nominal GDP growth is likely to slow further to 8.0 per cent in Q2, down from 8.8 per cent in Q1 and compared to 8.3 per cent in the same period last year. A favourable base effect and subdued deflator growth, which boosted Q1 GDP, continued to act as statistical drivers in the second quarter as well.
The report added that the steep 50 per cent US tariffs had not fully impacted the quarter because of the front-loading of exports by Indian companies. Strong government spending also supported overall GDP growth during the period.
Importantly, private sector activity, measured through GVA excluding agriculture and public administration, is expected to remain robust at 8 per cent in Q2, similar to the momentum seen in Q1 FY26. This, the report said, better reflects underlying economic activity.
However, the bank cautioned that the second half of FY26 may witness some moderation. It said that statistical drivers, such as base effects, may begin to fade, and that inflation measured by both WPI and CPI could see an uptick in Q4.
Delays in concluding the US-India trade deal and the lagged impact of earlier front-loaded exports may also soften growth.
Looking ahead, Union Bank said the GST rate cuts are expected to support demand and positively impact Q3 FY26 GDP numbers. But the delay in the US-India trade agreement could still weigh on growth, though India’s direct export exposure to the US remains limited at around 2 per cent of GDP, and even closer to 1 per cent when excluding exempted items.
The bank has also revised its FY26 GDP growth target upward to 7.1 per cent.
While the bank expects real GDP growth to rise in FY26, it projects that nominal GDP growth may decline due to lower inflation. (ANI)
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