India’s GDP grows at 6-quarter high of 8.2%

Union finance minister Nirmala Sitharaman said the numbers underlined the Indian economy’s momentum.

The Indian economy continues to surprise positively. After months of inflation ending up lower than expected, it is now GDP’s turn. Gross Domestic Product growth in the quarter ending September came at 8.2%, 80 basis points – one basis point is one hundredth of a percentage point – higher than the number predicted by a Bloomberg poll of economists, on the back of a strong all-round showing. This is also the highest quarterly GDP growth in six quarters. Growth for the first half of the fiscal year now stands at 8%, the highest in three years.

With India’s GDP at $3.9 trillion at the end of March this year, the rate of growth will mean India will become a $4tn economy by the end of the current financial year.(Representational Photo/Bloomberg)

While there are some statistical and cyclical factors at play , the numbers underline the dynamism in the Indian economy which continues to be the fastest growing in the world. Given the fact that the latest GDP print includes only nine days with lower Goods and Services Tax (GST) rates, the consumption tailwinds from lower taxes are yet to show in the data. And if RBI does bring down interest rates in its December meeting, one can hope to see an additional impetus to growth going forward.

Prime Minister Narendra Modi called the GDP growth “very encouraging”.

“It reflects the impact of our pro-growth policies and reforms. It also reflects the hard work and enterprise of our people. Our government will continue to advance reforms and strengthen Ease of Living for every citizen,” he said on X.

Union finance minister Nirmala Sitharaman said the numbers underlined the Indian economy’s momentum.

“The growth has been driven by sustained fiscal consolidation, targeted public investment, and various reforms that have strengthened productivity and improved ease of doing business. Various high-frequency indicators also point to continued economic momentum and broad based consumption growth,” she said.

Chief economic adviser V Anantha Nageswaran said that the momentum is looking positive on the basis of sound macro policies and sustained structural reforms. “Now that we have two quarters under our belt, and as MoSPI’s data show, the first half of the financial year has recorded a real GDP growth of 8%. So, now we can state comfortably that the full year growth will be either 7%, or to the north of 7% rather than to the south of 7%.”

With India’s GDP at $3.9 trillion at the end of March this year, the rate of growth will mean India will become a $4tn economy by the end of the current financial year.

“Core inflation remains stable, while timely rabi sowing and healthy reservoir levels reinforce a benign food supply outlook. The cumulative GST collection growth of 9% for Apr-Oct 2025 indicates that the underlying revenue stream has remained resilient, aided by firm consumption and improved compliance,” he added.

India’s GDP grew at 8.2% in the quarter ending September, according to data released by the National Statistical Office (NSO) on Friday. This is the highest quarterly GDP growth rate since the 8.4% print in the quarter ending March 2024. To be sure, GDP growth was impressive even in the quarter ending June when it was 7.8%. Gross Value Added (GVA) growth – GDP is GVA plus net indirect taxes – in the quarter ending September 2024 was 8.1%, an eight-quarter high. This number was 7.6% in the previous quarter.

What really explains the high growth rate? Both manufacturing and services are booming. Manufacturing growth has increased for the fourth consecutive quarter to reach 9.1% in September 2025. While services as a whole saw a marginal moderation of five basis points in growth between the quarters ending June and September 2025, the latest number is still 9.2%. The only underwhelming aspect of the latest GDP data is a fourth consecutive quarterly slowdown in agricultural growth, which came in at 3.5%. From the expenditure side, Private Final Consumption Expenditure (PFCE) grew at 8% in the September quarter compared to 7.1% in the June quarter. This was enough to boost the headline GDP print despite a slowdown in government consumption, investment and exports.

Disaggregation from the production and expenditure sides aside, what is the larger macroeconomic import of the latest GDP data? India will likely clock a faster real growth in the fiscal year 2025-26 than most institutional forecasts including RBI’s. The October resolution of the Monetary Policy Committee (MPC) predicted a growth rate of 7%, 6.4% and 6.2% for the quarters ending September, December 2025 and March 2026 and projected an annual growth of 6.8% for 2025-26. The actual numbers will almost certainly be higher. That, in itself, is unambiguously good news.

Nominal concern

The only number which will perhaps cause some concern in macroeconomic policy circles is the nominal or non-inflation-adjusted growth rate of the GDP. It is 8.7% for the quarter ending September 2025 and 8.8% for the first half of the fiscal year. This means that while real growth is at what are pretty much aspirational levels for India, nominal growth is ending up to be much lower than the 10.1% number which is what this year’s budget had assumed. Nominal GDP matters because it is the base for revenue generation – you pay taxes on nominal not real incomes and prices – and also things such as national debt etc. A significantly lower nominal GDP growth, therefore can upset fiscal and revenue calculations of not just the government but also private companies.

“If nominal averages 9%, then all nominal variables will have to be re-calibrated downwards. It will be hard to expect earnings, credit or tax growth to be in strong double digits if the new normal for nominal GDP is 9-9.5%. This explains why corporate earnings growth (EBITDA ex-extraordinary income) has averaged 8% over the last 6 quarters. Tax collections are another case in point. The budgeted growth in gross taxes this year – even before adjusting for the tax cuts – was 12.5% in FY26. But with nominal slowing, gross tax collections are growing at 2.7% thus far, with the asking rate of 21% in the coming months to meet budgeted targets”, JP Morgan Chief India Economist Sajjid Chenoy wrote in a research note released on November 21.

To be sure, some of the boost to real GDP numbers could also be on account of inflation ending up lower than usual, thereby keeping the GDP deflator low. However, this is something in keeping with the existing methodology and does not mean there is something wrong with the real GDP data. As inflation, both retail and wholesale, bottoms out this statistical boost to real growth is expected to come down.