India’s economic growth likely remained robust in Q2-FY26, with real GDP expected at ~7.2%, though down from 7.8% in Q1. The outturn is partly supported by a favourable base and lower GDP deflator. Growth is likely driven by government CAPEX and front-loaded exports ahead of US tariff implementation. Private consumption trends were mixed, and private investments showed tentative improvement. On the production side, industrial activity strengthened, services were mixed, and agriculture will likely reflect the impact of unseasonal rains. Looking ahead, private consumption is expected to improve, while government CAPEX will moderate due to fiscal constraints. External trade faces ongoing risks from US tariffs, reflected in October’s contraction in merchandise exports. Inflation eased to a historic low of 0.25% in October and is expected to remain subdued through Q3. The low inflation, combined with the RBI’s dovish signals in October and the anticipated H2-FY26 growth moderation, strengthens the case for a 25-bps rate cut in December. However, a dovish hold remains possible if Q2 GDP surprises on the upside and/or there is meaningful progress on a potential US–India trade agreement.