Q2FY26 Real GDP growth scales six-quarter high of 8.2%

5 Dec 2025 , 04:51 PM

Q2FY26 GDP GROWTH MAY TRIGGER FY26 UPGRADES

On the last working day of November 2025, MOSPI put out the Q2FY26 GDP growth figures. If Q1FY26 real GDP growth at 7.8% was a positive surprise, Q2FY26 was still better at 8.2%. More importantly, it also marked the best quarterly GDP growth in the last 6 quarters. Nominal GDP was up 8.7% in Q2FY26. Low inflation has ensured that most of the nominal growth is being transmitted in the form of real GDP growth.

Let us turn to the growth leaders and laggards in Q2FY26. Manufacturing and Construction saw real growth of 9.2% and 7.2% respectively in Q2FY26. Like in the first quarter, the big thrust came from services; led by real growth in finance & realty at 10.2%, and public administration and defence at 9.7%. Real agriculture growth may look tad overstated as the tepid nominal growth was offset by negative inflation in agri-products.

Q2FY26 REAL GVA AND REAL GDP (QUARTERLY ESTIMATE)

Real GDP and Real GVA, post inflation, are a good barometer of the wealth effect in the economy, as evinced in the table below.

Sector	Q2FY24	Q2FY25	Q2FY26	Q2FY25 (%)	Q2FY26 (%)
Primary Sector	5,22,188	5,40,666	5,57,501	3.5	3.1
Agriculture, Livestock, Forestry	4,56,998	4,75,765	4,92,623	4.1	3.5
Mining & Quarrying	65,190	64,901	64,878	-0.4	0.0
Secondary Sector	11,27,299	11,72,416	12,67,823	4.0	8.1
Manufacturing	7,05,592	7,20,846	7,86,670	2.2	9.1
Electricity, Gas, Utility Services	1,00,019	1,02,970	1,07,519	3.0	4.4
Construction	3,21,688	3,48,601	3,73,634	8.4	7.2
Tertiary Sector	22,63,703	24,27,523	26,51,589	7.2	9.2
Trade, Hotels, Transport	7,13,765	7,57,326	8,13,369	6.1	7.4
Financial, Realty	10,47,187	11,22,890	12,37,877	7.2	10.2
Public Administration, Defence	5,02,752	5,47,308	6,00,343	8.9	9.7
Real GVA	39,13,191	41,40,606	44,76,914	5.8	8.1
Real GDP	42,54,806	44,93,587	48,63,340	5.6	8.2
Data Source: MOSPI (Figures are ₹ in Crore)

The above table not only provides a comparison of absolute figures for Q2 in the last 3 years, but also presents yoy growth in the current and previous fiscal year. There are key takeaways from real GDP data. Firstly, while real GVA (gross value added) stood at 8.1%, real GDP growth was 8.2%. The GVA is a more reliable barometer, as it removes the impact of indirect taxes and subsidies in growth. Improvement in real GDP growth came from low inflation, with CPI inflation touching an all-time low of 0.25% in October 2025.

While primary sector has lagged in terms of growth, it is the secondary and the tertiary sectors that are showing the real traction in Q2FY26. Manufacturing has bounced back based on capex and improved capacity utilization. With a greater thrust on inward looking growth amid tariffs, the finance and realty sector have also seen good traction. It does not look like the global tariffs have had any serious impact on the India growth story.

NOMINAL GVA AND NOMINAL GDP FOR Q2FY26 (QUARTERLY ESTIMATES)

The table below captures the sector wise break up of Nominal GDP for Q2FY26, juxtaposed with Q2FY25 and Q2FY24.

Sector	Q2FY24	Q2FY25	Q2FY26	Q2FY25 (%)	Q2FY26 (%)
Primary Sector	10,72,320	11,43,824	11,57,592	6.7	1.2
Agriculture, Livestock, Forestry	9,63,835	10,37,227	10,55,598	7.6	1.8
Mining & Quarrying	1,08,485	1,06,597	1,01,993	-1.7	-4.3
Secondary Sector	17,01,391	17,81,871	19,47,152	4.7	9.3
Manufacturing	9,77,712	10,10,480	11,28,529	3.4	11.7
Electricity, Gas, Utility Services	1,87,450	1,92,042	1,99,237	2.4	3.7
Construction	5,36,229	5,79,349	6,19,385	8.0	6.9
Tertiary Sector	38,26,418	42,18,988	46,64,631	10.3	10.6
Trade, Hotels, Transport	11,53,823	12,53,407	13,38,787	8.6	6.8
Financial, Realty	17,06,883	18,74,943	20,91,052	9.8	11.5
Public Administration, Defence	9,65,712	10,90,638	12,34,791	12.9	13.2
Nominal GVA	66,00,129	71,44,683	77,69,374	8.3	8.7
Nominal GDP	72,40,697	78,40,345	85,25,070	8.3	8.7
Data Source: MOSPI (Figures are ₹ in Crore)

The nominal GDP and GVA growth assumes importance as it is the barometer of overall business size.  It has direct implications for tax collections, and for job creation. In the case of manufacturing and services, the gap between the nominal growth and real growth is not too significant. That is because inflation has moved to as low as 0.25% in October. However, in the case of agriculture, the real growth is higher than the nominal growth due to negative inflation in most food products.

The positive takeaways is that Indian economy has grown at 7.8% in Q1 and 8.2% in Q2, averaging 8% real growth in the first half of FY26. This could translate into a slew of growth upgrades. While the tariff stress is yet to be felt on the Indian economy, it could be more prominent in Q3 and Q4. For now, it looks like the India domestic story is robust enough to drive economic growth in India.