India’s economic momentum remains resilient, with policy support cushioning external headwinds. Following a strong Q1, high-frequency indicators for Q2 suggest that the momentum was largely sustained, though with some sectoral unevenness. Industrial activity strengthened, agriculture maintained healthy but moderating growth, and services indicators were mixed.

Consumption recovery continued, supported by the festive-season demand and GST rate cuts. Government capex remained robust though it moderated as front-loading tapered. Encouragingly, private investment showed early signs of revival. On the external front, merchandise trade faced pressure from US tariffs, but export diversification and progress toward a potential US-India trade deal provided some relief. Overall, real GDP growth is projected at 6.8% YoY in FY26. Inflation eased to an eight-year low of 1.54% in September and is expected to decline further in October. The ongoing disinflation trend enhances the RBI’s policy space, reinforcing expectations of a 25-bps repo rate cut in December.