How has the Indian economy performed in the last quarter? A report by SBI projected India’s GDP growth at 7.5 per cent for the second quarter. However, the rating agency ICRA expects a lower GDP print of 7 per cent for the quarter.
While the State Bank of India maintains that India’s economy saw a boost due to the growth in rural consumption, investment, and the positive impact of GST rationalisation, ICRA said that low government capital expenditure in Q2 could have been a point of concern.
GST vs Capex- The bigger impact
The SBI report said, “Based on the estimated model, we obtain a nowcast of real GDP growth of 7.5% in Q2FY26 with the possibility of an upside surprise.” Furthermore, SBI added that on the fiscal side, gross domestic GST collections for November 2025 are expected to be around Rs 1.49 lakh crore, registering 6.8 per cent YoY growth.
However, ICRA chief economist Aditi Nayar said a lower YoY rise in government spending is likely to weigh on the pace of the GDP and GVA growth in Q2 FY2026 compared to Q1 FY2026.
“However, inventory stocking related to the early onset of the festive season, enhanced by the GST-rationalisation induced volume pick-up, and upfronting of exports to the US ahead of the tariffs, are expected to boost the performance of the manufacturing sector, and help industry GVA growth outpace that of the services after a gap of four quarters,” Nayar said.
SBI see growth across sectors
The SBI report says that the GST rationalisation before the festive season results in a significant consumption growth.
The State Bank of India report stated that the country’s economic growth continues to be underpinned by buoyancy in both the services and manufacturing sectors, alongside structural reforms that have strengthened demand conditions.
The share of leading indicators reflecting growth in consumption and demand increased to 83 per cent in Q2, compared with 70 per cent in Q1. It added that the GST rationalisation before the festive season results in a significant consumption growth.
Agriculture to lose momentum- ICRA
ICRA said while the services and agriculture sectors would lose some momentum in the second quarter, industrial performance would be strong, propelled by manufacturing, construction and favourable base effects. The rating agency expects it to underpin the quarter’s economic activity.
Expectations indicate that the GDP numbers may stay around the key 7% mark. All eyes are on the actual Q2 GDP print that is likely to be announced on November 28.