Winning Bizness Economic Desk

Mumbai. India’s economy posts its strongest performance in six quarters with GDP expanding 8.2 per cent in the July–September period, beating earlier expectations and signalling a sharp rebound despite global headwinds. The rise comes at a time when several economies, including emerging markets, are struggling with the impact of US tariffs, weak private investment and slowing external demand. India had recorded 7.8 per cent growth in the April–June quarter, while the same period last year stood at 5.6 per cent. Fresh data from the National Statistical Office shows that rural demand, government spending and a clear pick-up in factory output played a decisive role in lifting the numbers.

Rural strength and manufacturing momentum push growth

The latest figures highlight that domestic demand, especially from rural regions, has shown strong recovery. Government spending on infrastructure and welfare schemes added further support. Manufacturing output, which had been sluggish for several quarters, recorded a sharp rise of 9.1 per cent, compared to just 2.2 per cent a year earlier. Officials believe that the full impact of GST rate cuts will unfold in the coming months, potentially giving additional lift to future quarters.

Why household spending drives the GDP engine

Private consumption accounts for nearly 60 per cent of India’s GDP, making it the single largest growth driver. This includes routine household purchases such as groceries, school fees, consumer electronics, fuel, two-wheeler EMIs and home essentials. During the July–September quarter, private consumption growth jumped from 6.4 per cent to 7.9 per cent, indicating that families felt more comfortable spending compared to last year’s cautious trend. A rise in discretionary purchases and steady festival-season buying helped revive demand.

In the middle of the period, several economic indicators showed a clear improvement:

• Higher rural sales of two-wheelers and consumer goods
• Steady rise in power consumption and freight movement
• Stronger inflows into small businesses and services

RBI projection surpassed as economy shows resilience

Earlier in October, the Reserve Bank of India had revised its full-year FY26 growth estimate from 6.5 per cent to 6.8 per cent, citing better-than-expected activity. The second quarter growth has now exceeded even that higher projection, pointing to broad-based economic resilience. Economists say that controlled inflation, stable interest rates and steady public capital expenditure have added confidence to both consumers and businesses.

Understanding GDP and how it is computed

GDP is a standard measure of a country’s economic health. It represents the total value of goods and services produced within national borders over a particular period. Production carried out by foreign companies operating within India is also counted. GDP is measured in two ways: real GDP, calculated using constant base-year prices (currently 2011–12), and nominal GDP, calculated using current prices. The broad formula used is GDP = C + G + I + NX, where C is private consumption, G is government spending, I is investment and NX is net exports.

Four key engines shaping India’s economic path

India’s growth ultimately depends on four major contributors:

• Household demand, which forms the largest share of the economy
• Private sector business expansion, contributing about 32 per cent
• Government expenditure, which accounts for 11 per cent
• Net demand from global trade, where India’s higher imports than exports continue to exert a negative effect

Toward the end of the assessment, policy experts noted:

• India’s domestic engines are compensating for weak global trade
• Manufacturing revival could sustain momentum in the coming quarters
• Consumption stability will be crucial during the next policy cycle

This combination of household spending, factory output and public investment has ensured that India remains one of the fastest-growing major economies, despite global economic uncertainty.