India’s economy is expected to retain solid momentum in the September quarter, with various independent assessments placing real GDP growth for Q2 FY26 in the 7.0%–7.5% range, the Finance Ministry said in its Monthly Economic Report for October 2025.The report said the economy entered the second half of FY26 on a stable footing, supported by well-contained inflation, resilient domestic demand and broadly supportive policy dynamics.
“Overall, the economy enters the second half of FY26 on a stable footing, anchored by well-contained inflation, resilient domestic demand and supportive policy dynamics, even as global uncertainties warrant continued vigilance,” the report said.
According to the ministry, the external environment remains marked by elevated trade policy uncertainty. India’s merchandise exports weakened in October, a trend driven by a surge in gold and silver imports, which widened the merchandise trade deficit. At the same time, services exports touched their highest-ever monthly level, providing a substantial buffer to the external account.Capital flows were mixed during the month. Strong foreign direct investment inflows offset subdued portfolio activity, the report said. India’s foreign exchange reserves stood at $687 billion, continuing to offer a sizeable cushion against external shocks.The ministry said domestic economic conditions remain broadly stable, aided by moderate inflation and steady demand indicators. It added that the divergence between merchandise exports and strong services performance continues to shape India’s external position amid a volatile global backdrop.Also Read: MoSPI sets out proposed reforms to GDP, CPI and IIP ahead of base-year revision
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