New Delhi: The Indian economy is estimated to have grown at 7.3 percent in September quarter of current fiscal, though at a slower pace than the 7.8 percent growth clocked in June quarter, a finance ministry report said on Thursday.
The September edition of the Monthly Economic Review report said the economy began FY27 on a firm footing, even as the global environment grew more uncertain.
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The conflict in West Asia disrupted energy markets and trade routes, testing economies across the world. India's real GDP grew by 7.8 percent in the first quarter, the highest first-quarter growth in the current series.
"Our nowcasting measure, unveiled in the Economic Survey earlier this year, anticipates a real GDP growth rate of 7.3 percent in the fiscal second quarter," the report said.
The growth momentum of the June quarter has extended into second quarter of FY27 though at a more measured pace. E-way bill generation and the manufacturing PMI have grown more slowly, while services activity firmed up in August, driven by stronger new business and employment.
Electricity and fuel consumption continue to register healthy growth, and bank credit has sustained its strong expansion. Production of capital goods and infrastructure goods points to continued strength in the investment cycle. Automobile sales have grown at a healthy pace across rural and urban markets, underscoring the breadth of consumption.
The report said most high-frequency indicators pointed to continued economic activity in the early part of Q2, it said.
The recent sovereign rating upgrade underscores the strengthening of India's economic fundamentals, with Japan Credit Rating Agency raising India's rating from BBB+ to A- in September 2026.
Monsoon conditions have been more favourable than earlier anticipated, with kharif sowing close to last year's levels across several crops, which supports the outlook for agricultural output and rural demand, although rabi prospects will require monitoring, the report said.
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Nevertheless, external risks persist, with renewed geopolitical tensions and the growing weaponisation of supply chains, keeping energy prices volatile, tightening global financial conditions, and disrupting trade routes. Sustaining growth will therefore require preserving macroeconomic stability and strengthening economic resilience.
Overall, industrial activity remained resilient, supported by strong manufacturing GVA growth, continued expansion in industrial production and strengthening bank credit to industry.
"Going forward, sustaining industrial momentum while increasing scale, domestic value addition, supply-chain depth and export competitiveness will remain important for broadening the manufacturing base," the report added.
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