GDP growth signals recovery

India’s recent GDP figures depict an economy that is not only rebounding but also reinforcing a fundamentally strong structure. The Ministry of Statistics and Programme Implementation reported real GDP growth of 8.2 per cent in the second quarter of FY 2025-26, far above the 5.6 per cent recorded a year earlier. This performance confirms India as the fastest-growing major economy and shows that the recovery is durable rather than temporary. Real GDP at constant prices has risen from INR 44.94 lakh crore in Q2 FY 2024-25 to INR 48.63 lakh crore, reflecting firm underlying fundamentals. Equally important is the breadth of growth. The secondary sector expanded by 8.1 per cent, supported by a 9.1 per cent rise in manufacturing and 7.2 per cent growth in construction. Improvement in the Index of Industrial Production points to better capacity utilisation and stronger factory activity. The tertiary sector grew 9.2 per cent, driven by trade and transport, financial and professional services, and public administration. Private final consumption rose 7.9 per cent, showing domestic demand remains resilient despite global uncertainty.

Within services, the standout is the financial, real estate and professional services segment, which grew 10.2 per cent in Q2 compared with 7.2 per cent a year earlier. It now accounts for 27 per cent of nominal GVA, the largest contribution within the services economy. Crucially, the trend is sustained: growth of 7.2 per cent in FY 2023-24, the same in FY 2024-25, and then a rise to 10.2 per cent in FY 2025-26. Half-year data show the sector strengthening further, while nominal growth reaching 11.3 per cent reflects rising value creation.

The banking system mirrors this improvement. Total bank credit rose 10.8 per cent and deposits increased 9.4 per cent. Retail lending, stronger housing demand, a revival in corporate credit and wider formal access in Tier-2 and Tier-3 cities are key drivers. Insurance and mutual funds continue to deepen household financialisation, while real estate activity remains firm alongside a 7.2 per cent rise in construction. Property uptake in major and emerging cities signals investor confidence and improving affordability.

Professional services — consulting, IT-enabled, legal, accounting, management and digital solutions - are another source of momentum, supported by domestic demand and India’s growing global services presence. Firms increasingly seek expert advice on compliance, technology and finance. The broader consequence is that India’s growth base is widening and deepening. A financial sector expanding 9-11 per cent provides resilience against shocks, stabilises cycles, mobilises savings and enables entrepreneurship. Because the sector represents more than a quarter of nominal GVA, its sustained expansion will shape macroeconomic outcomes well into the future.

Beyond finance, headline figures show a robust consumption-led economy. Private consumption rose 7.9 per cent, while GST rationalisation should leave more liquidity with households. Gross fixed capital formation grew 7.3 per cent, signalling continued investment in infrastructure and industry. Exports increased 5.6 per cent, and imports rose 12.8 per cent, underlining strong domestic demand. What makes these achievements notable is the difficult global backdrop. Geopolitical tensions, weaker trade, commodity volatility and unstable financial markets persist, yet India’s engines of consumption, investment, manufacturing revival and a dynamic services sector have limited disruption. Both GVA and GDP rose above 8 per cent, while nominal GDP grew 8.7 per cent with contained inflation — an encouraging sign for stability. Looking ahead, India appears positioned for full-year growth between 7.2 per cent and 7.5 per cent. Momentum will depend on private investment revival and stronger rural demand. The financial sector’s three-year uptrend will be central to sustaining medium-term expansion. With a more inclusive, technology-enabled and well-capitalised system taking shape, finance is becoming a core pillar of resilience.

Equally, policy continuity will matter. Stable regulatory frameworks encourage investment, while prudent fiscal management preserves confidence. Sustained emphasis on infrastructure, skills and innovation can lift productivity and support inclusive growth across regions. Strengthening credit delivery to small enterprises and improving financial literacy will deepen participation in the formal economy. Meanwhile, vigilance against financial risks — from excessive leverage to asset-quality pressures — will remain essential as the system expands. Handled carefully, today’s momentum can translate into durable gains in employment, investment and living standards. India’s latest GDP performance therefore represents not only fast growth, but also a gradual strengthening of the foundations on which future prosperity will rest. As global conditions remain uncertain, economies with domestic depth and diversified engines will be better placed to navigate shocks. India’s mix of investment, consumption, services strength and improving financial intermediation provides exactly such a platform. If reforms continue to encourage productivity and broaden opportunity, the country can aim not only to grow faster, but to grow more sustainably and inclusively as well. That, ultimately, is the promise embedded in the present GDP numbers. Maintaining discipline, investing wisely and expanding opportunity can keep this trajectory secure for years.

The writer is the Managing Director, Resurgent India; views are personal