Economy may grow 7.3% in Q2: Finance ministry

India’s economy is expected to grow 7.35% in Q2 FY27 (AI-generated image)

NEW DELHI: Amid a challenging global environment, the Indian economy is well positioned to sustain the growth momentum for the rest of the financial year 2026-27 and is expected to expand 7.35% during the July-Sept quarter on the back of strong domestic demand, investment and structural reforms, the finance ministry said in its monthly economic review Thursday.While RBI has projected 7.1% growth for the full financial year, most global agencies too estimate the Indian economy to expand 6.9-7.1% this year after the first quarter official estimates pegged the growth rate at 7.8%. "Healthy credit growth and recent trade agreements are expected to provide additional support to consumption, investment and exports," it said.The review said the near-term industrial outlook remains supported by firm production, strengthening of order flows, improved manufacturing sentiment and robust industrial credit, though, uncertainty around energy prices, supply-chain pressures and geopolitical developments remain relevant for manufacturing costs and investment decisions.

"Sustaining industrial momentum while translating policy support into greater production at scale, higher domestic value addition and stronger export competitiveness will remain important," it said.Regarding the impact of the crisis in West Asia on exports, the review said robust merchandise export growth and a steady services surplus have cushioned the trade balance, while strong capital inflows, particularly banking capital, financed the wider current account deficit during April-Aug FY27.