India's Economy Hits 7.35% Growth in July-Sept Quarter
India's economy grew by 7.35% in the July-September quarter, driven by strong GST collections and auto sales, according to the Finance Ministry.
India's economic momentum remains robust, with the economy estimated to have grown by 7.35 per cent during the July-September quarter of the current financial year (FY27). This growth, according to the Finance Ministry's October Monthly Economic Review, was primarily propelled by a surge in industrial activity, strong domestic demand, and increased consumption.
The estimate is derived from the ministry's "nowcasting model," a tool first introduced in the Economic Survey 2025-26. This figure follows a slightly higher growth rate of 7.8 per cent recorded in the April-June quarter. Interestingly, this 7.35 per cent estimate slightly exceeds the 7.3 per cent growth the ministry had previously projected in its September review.
Key Drivers of Economic Momentum
The Finance Ministry highlighted several critical economic indicators that signaled a sustained growth trajectory during the second quarter. The report pointed to strong performances in electricity consumption, port traffic, industrial production, and automobile sales.
The GST and Auto Surge
Two of the most striking highlights from the report include:
- GST Collections: Gross GST collections saw a significant jump, growing by approximately 15 per cent in the July-September quarter, a sharp increase compared to the 8.4 per cent growth seen in the previous quarter.
- Automobile Sales: Domestic auto sales witnessed a massive year-on-year increase of around 25 per cent, driven by healthy demand from both urban and rural markets.
Signs of Recovery and Future Outlook
Business activity showed a positive trend toward the end of the quarter. Both the services and manufacturing sectors strengthened in September, reflected in recovering PMI (Purchasing Managers' Index) readings and improved business sentiment. This suggests a cautiously optimistic outlook for the months ahead.
Looking forward to the remainder of FY27, the Finance Ministry expects that structural reforms, investment activity, and domestic consumption will continue to be the primary engines of growth. Additionally, recent trade agreements and healthy credit growth are expected to further bolster exports, investment, and consumption.
Global Headwinds and External Forecasts
Despite the positive internal indicators, the ministry warned that the road ahead is not without obstacles. Global uncertainties remain a concern, specifically:
- Volatility in energy and crude oil prices.
- Persistent geopolitical tensions and frictions.
- Global financial tightening and inflationary pressures.
However, the report maintains that the Indian economy is well-positioned to sustain its expansionary path despite these headwinds.
What the Global Experts Say
While the Finance Ministry provides its own estimates, international and domestic financial institutions have also weighed in on India's growth for FY27:
- International Monetary Fund (IMF): Projects growth of 7.0 per cent.
- World Bank, OECD, and Reserve Bank of India (RBI): All forecast a growth rate of 7.1 per cent.