India’s economy is expected to grow by 7.3 per cent in the second quarter of financial year 2027 (FY27), supported by resilient domestic demand and investment.
According to the Finance Ministry’s Monthly Economic Review for September, the economy entered the second quarter of current fiscal from a position of strength after recording 7.8 per cent growth in the first quarter.
However, it cautioned that India cannot take its growth performance for granted as geopolitical polarisation and disruptions across global supply chains intensify. Higher oil prices, tightening global financial conditions and trade uncertainty pose challenges to sustaining the growth momentum.
The review highlighted that high-frequency indicators for July to August suggest growth has continued into the second quarter, although at a more measured pace.
E-way bill generation and manufacturing activity have moderated, while services activity strengthened in August, supported by new business and employment.
It added that healthy growth in electricity and fuel consumption, sustained bank credit expansion and stronger production of capital and infrastructure goods point to continued investment momentum.
The review also outlined a strong export outlook. It said that at the current run rate of nearly 400 billion US Dollars in total exports achieved in the first five months of the year, country’s overall export value for the full financial year could approach a trillion US dollars.
The ministry said country faces renewed pressure on its currency and capital flows as a sharp rise in oil prices and global bond yields worsens the external environment. It added that rising interest rates in developed economies could slow cross-border capital flows by encouraging investors to retain funds in their home markets.
The review noted that competition for investment is also intensifying as countries seek capital for artificial intelligence infrastructure and renewed manufacturing capacity.
It also added that uncertainty surrounding trade relations with the United States, tariff pressures and crude oil prices continue to weigh on investor sentiment towards India.
