Finmin pegs Q2 expansion at 7.35%,flags capital pressure over US yield
India’s economy is estimated to have grown 7.35% in the September quarter, supported by strong industrial output, GST collections, energy use, port traffic and auto sales, the finance ministry said. It expects domestic demand and investment to sustain momentum, while warning that high crude prices, food inflation, rupee pressure and elevated US bond yields could pose risks in the second half.
The Indian Finance Ministry anticipates the economy to expand by 7.35% in the second quarter (Q2) ending September. This projection is based on robust indicators such as industrial output, energy consumption, port traffic, Goods and Services Tax (GST) collections, and automobile sales. The Ministry released its Monthly Economic Report (MER) for October, which also highlighted that global risk appetite could impact market behavior differently in the future.
GDP data for the second quarter of fiscal 2027 will be published on November 30, with Q1 reporting a real GDP growth of 7.8%. The MER noted that India managed to stay relatively insulated from rising yields in other markets but cautioned that higher US 10-year Treasury yields could negatively affect capital inflows.
The Ministry emphasized that policymakers would prioritize maintaining price stability during the second half of the financial year. It highlighted several factors contributing to the country's growth resilience, including robust domestic demand, sustained investment activity, a resilient financial sector, and supply-side management.
The Ministry also stressed the importance of sustaining industrial momentum, translating policy support into greater production at scale, and enhancing domestic value addition and export competitiveness.
Concerns over energy prices, supply-chain pressures, and geopolitical developments were mentioned as relevant for manufacturing costs and investment decisions. The Ministry warned that sustaining industrial momentum while achieving these goals would be crucial. The rupee's depreciation has made Indian exporters more price-competitive, but higher domestic inflation has partly offset these gains. The Ministry stated that although India's foreign exchange reserves position is adequate, external strain on the rupee persists.
While global economic uncertainty persisted due to the conflict in West Asia, India weathered it better than expected in the second quarter.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
