India’s economy is surging into the second half of the fiscal year with powerful, domestically driven momentum, reporting robust growth figures across GDP, industrial activity, and employment, all while achieving remarkable stability on the price front. The latest data reveals that Real Gross Domestic Product (GDP) growth for the second quarter (Q2) of FY 2025-26 accelerated sharply to 8.2%, significantly exceeding the 5.6% rate recorded in the same period last year, thereby positioning the half-year (H1) growth at a strong 8%. This significant expansion is anchored by the services sector, with the highly critical Tertiary Sector leading the charge with a robust 9.2% Real GVA growth in Q2, closely followed by the Secondary Sector (industry) at 8.1%.
Further solidifying the positive outlook is the achievement of price stability. Headline inflation, measured by the Consumer Price Index (CPI), eased to a multi-year low of 0.25% in October 2025, marking the lowest level recorded in the current CPI series. This stability was primarily driven by a sharp moderation in food prices, with the Consumer Food Price Index (CFPI) registering a significant decline of (-)5.02% year-on-year. This cooling inflationary environment, which remains well within the RBI’s tolerance band, has allowed the central bank to maintain the repo rate at 5.50% with a neutral stance, supporting growth prospects.
The industrial base remains resilient, evidenced by the Index of Industrial Production (IIP) registering a solid 4.0% growth in September, bolstered by a 4.8% expansion in the Manufacturing sector. Key drivers include the Manufacture of Electrical Equipment, which saw a powerful surge of 28.7%. This industrial strength is being supported by strategic government initiatives like the Production Linked Incentive (PLI) Scheme, which has already successfully attracted investments exceeding ₹1.76 lakh crore. On the fiscal front, Gross GST collections for October 2025 surged to ₹1.96 lakh crore, marking a healthy 4.6% increase over the previous year and underscoring resilient consumption trends during the festive season.
The labor market also shows encouraging signs of resilience, with the overall Labour Force Participation Rate (LFPR) for persons aged 15 years and above hitting a 6-month high of 55.4% in October. White-collar hiring momentum remains strong, as the Naukri JobSpeak index recorded a 10.1% year-on-year rise, led by a massive 61% surge in demand for Artificial Intelligence and Machine Learning roles. Internationally, the trade sector continues to reinforce economic stability, with cumulative exports expanding by 4.84% to USD 491.80 billion in the first half of the fiscal year, anchored by services exports growing by 9.75% and a striking 37.82% growth in Electronic Goods exports. The overall strong performance has led global institutions to upgrade their forecasts, with the RBI revising its FY 2025-26 GDP projection upward to 6.8%, and the IMF projecting 6.6% growth for 2025. The overall picture signals a well-balanced, domestically driven economic upturn, strengthening the foundation for sustained, stable growth.
