Business: The country’s economy is expected to grow at a strong pace of 7.2 percent in the second quarter of the current financial year 2025-26 after the April-June period. Strong growth in private consumption will be the key driver. The growth rate of real GDP in April-June was the fastest in five quarters at 7.8 percent, while in the second quarter of 2024-25 it grew at a pace of 5.6 percent.

The National Statistical Office (NSO) will release GDP growth data for the second quarter (July-September) of the current financial year on November 28. Rating agency India Ratings and Research said in a report on Wednesday that private consumption will grow by eight percent on an annual basis in the second quarter of financial year 2025-26. It increased by seven percent in the first quarter of the financial year 2024-25 and by 6.4 percent in the second quarter.

Income tax relief supports consumption demand
Paras Jasrai, economist and executive director of the rating agency, said a surge in private consumption due to rising stable real incomes of high- and low-income households is a key driver of growth. Income tax cut also boosted consumption demand. If purchase decisions had not been postponed due to rationalization of GST rates, private consumption would have grown even faster.

Manufacturing-services sector also supports growth rate
A strong services sector along with goods export growth in manufacturing boosted GDP growth from the supply side in the second quarter, Jasrai said. During this period, investment demand has grown at a strong rate of 7.5 per cent, with stable government capital expenditure playing an important role.