India economy expands 7.35% in Q2 FY27

India’s economy grew by an estimated 7.35% during the July-September quarter of the 2026-27 financial year, according to the Finance Ministry’s Monthly Economic Review. This growth was driven by robust domestic demand, rising consumption, and improved industrial performance, though it represents a slight decrease from the 7.8% growth recorded in the previous quarter.

Key economic indicators showed strength, including a 15% increase in Goods and Services Tax (GST) collections and a 25% year-on-year rise in domestic automobile sales. The manufacturing and services sectors also showed signs of recovery toward the end of the quarter.

Regarding fiscal health, India’s fiscal deficit for the first half of FY27 reached Rs 7.14 lakh crore, representing 42.1% of the full-year budget target. While total government expenditure rose to Rs 25.5 lakh crore, capital expenditure on infrastructure projects like highways, rail, and ports increased to Rs 6.5 lakh crore. Subsidy spending also saw an increase, driven in part by higher petroleum and fertilizer costs related to conflicts in the Middle East.