India’s Record Q2 GDP Growth Despite Tariffs & Global Uncertainty

With the India Q2 GDP growth numbers announced on Friday, 28 November 2025, the economy again showcased utmost resilience. With the ongoing tariff war, global uncertainties, and geopolitical issues, everyone expected the growth to slow down. However, the Indian economy seems to have defied all the odds, as the Real GDP growth for the Q2FY26 is now being anticipated to be at 8.2%, the highest in the past six quarters. Surprising right? Let’s try to explore what actually drove the economy at such a pace amidst all the challenges. 

What led Q2FY26 GDP Growth?

The India Q2 GDP is expected to grow at 8.2% as anticipated by the government, against everyone’s earlier expectations. This massive expansion is perhaps due to the resilient rural economy, which is growing at a significant pace. Furthermore, the rise in government expenditure, or capex, is another reason for the surprising economic growth during the second quarter of the fiscal year. Apart from these, there are also front-loaded export shipments, which witnessed a significant rise, helping the economy to grow further. This expansion happened in a time when private sector capital formation was quite slow, which again indicates the resilient rural markets and increasing public spending. 

Key Estimates and Numbers 

Here are some of the Key constituents of the GDP growth rate of 8.2% in Q2FY26 – 

• Real GDP growth estimated at 8.2% against the 5.6% growth registered during Q2FY25
• The secondary sector is expected to grow by 8.1% while the tertiary sector by 9.2%, and these are key drivers of the overall GDP growth. 

Sector-wise GDP Growth Estimates 

• Manufacturing Sector – 9.1% 
• Construction – 7.2%
• Financial, Real Estate & Professional Services – 10.2%
• Agricultural and Allied Sector – 3.5%
• Utility Sector – 4.4%

RBI Rate Cut Expectations 

While the July-September quarter economic growth has come as a surprise but it might lead RBI to not cut the repo rate further in the December Monetary Policy Committee meeting (MPC) as anticipated by the analysts and experts. Even though the inflation has been drastically down at just 0.25% but this massive economic boost puts the RBI in a fix about their rate cut decision.

The inflation has been primarily down due to GST rate cuts, which boosted the economic growth by raising the demand further. The good kharif harvest also added to the lower inflation number, but the higher-than-expected GDP Q2 FY26 number may affect the rate cut decision in December. 

Earlier, analysts and experts anticipated a 25-bps rate cut in the December MPC meeting; however, now they are anticipating that the RBI may push the rate cut to February, keeping it unchanged in December.  

Stock Market Reaction 

While the strong Q2 GDP growth rate made the Indian stock market surge rapidly during the early hours of today’s session, but market started falling sharply after the sharp rise. Sensex rose by 452.35 points, reaching a new high of 86159.02 during the early hours of today’s trading session. But now it has contracted to 85607.60 points, falling as the rate cut outlook seems to be negative, along with weak global cues. Nifty jumped to 26325.80 points as well, but now declined to 26186.20 points at around 1 p.m. today. 

Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.