India's economy projected to grow 7.35 percent, finance ministry forecasts

India's finance ministry has estimated that the Indian economy grew by about 7.35 percent in the second quarter of fiscal year 2027, covering July to September. The ministry released the estimate in its monthly economic review on Thursday.

The nowcasting model behind the estimate drew on rising industrial output, energy consumption, port cargo volumes, goods and services tax collection, and vehicle sales.

The International Monetary Fund has revised its estimate for India's growth this fiscal year to about 7 percent, while the World Bank, the Organisation for Economic Co-operation and Development, and the Reserve Bank of India have projected growth of about 7.1 percent.

According to the report, strong domestic demand, rising investment, steady industrial credit and recent structural reforms will drive the economy. However, the ministry flagged external risks including rising crude oil prices, disrupted sea shipping and a possible slowdown in AI-related investment, stemming from the crisis in West Asia.

The report also warned that El Nino could reduce soil moisture for the winter crop, while festival-season demand could add to inflationary pressure. The ministry said India's foreign exchange reserves are sufficient to cover about 10.3 months of imports.