India’s economic growth momentum slowed for the second consecutive quarter, with the Gross Domestic Product (GDP) expanding by 5.8% in the second quarter (July-September) of the 2025-26 fiscal year, down from a revised 6.5% in the previous quarter, data released by the National Statistical Office (NSO) showed today.
The deceleration, largely anticipated by economists, is attributed to a severe synchronised global recession in key Western markets, which has hammered India's export-oriented sectors. The manufacturing sector, a key employment generator, contracted by 0.5%, while growth in the services sector, particularly in IT and exports, halved to 4.2% from the previous quarter.
However, a silver lining emerged from the farm sector, which posted a robust growth of 4.5% due to a normal monsoon, and mining, which grew by 6.1%.
"These numbers reflect the harsh reality of the global economic landscape," stated Dr. Ananya Verma, Chief Economist at the Centre for Monitoring Indian Economy (CMIE).
"Our export orders have dried up, and while domestic consumption is holding steady, it is not enough to fully offset the external shock. The focus must now be on insulating the domestic economy through targeted fiscal support."
In response to the data, Finance Minister Nirmala Sitharaman held an emergency meeting with top officials. While ruling out a "full-blown fiscal stimulus," she indicated that the government is considering accelerating infrastructure projects and extending credit guarantee schemes for micro, small, and medium enterprises (MSMEs).
The Reserve Bank of India (RBI) is widely expected to hold interest rates in its next policy review, prioritising growth amidst a period of controlled inflation. All eyes are now on the upcoming Union Budget to provide a clearer roadmap for navigating these turbulent global waters.
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