The Blazing Growth Print India Simply Doesn’t Feel

India’s National Statistical Office recently released the July-September GDP figures for 2025-26, showing 8.2% real growth. At the first glance, the number is spectacular. It dismisses all talk of slowdown, renders the aggressive fiscal stimulus of the past year unnecessary, and suggests that the Indian economy is not only immune to the looming threat of US tariff hikes but is actually accelerating in spite of them.

Private final consumption expenditure reportedly surged 8%, more than offsetting a rare contraction in government spending at 2.7%, and a sharply wider current account deficit at 3.5% of GDP. On the supply side, manufacturing grew 9.1%, overall services 9.2%, and financial-real estate services by a even faster clip of 10.2%. In the first half of 2025-26, the economy has averaged exactly 8% growth, something achieved in only seven of the fifty-four pre-COVID years. By any historical benchmark, this is a marvel.

Yet almost few feel it.

Also Read: The Quarter When Nominal Growth Became the Real Signal

Corporate boardrooms remain anxious, households feel squeezed, foreign investors are selling, and the Indian rupee is under relentless pressure, flirting with the psychologically important 90-to-a-dollar mark despite repeated RBI interventions. Policy makers themselves behave as if the economy needs handholding: the government has rolled out GST rate cuts, slashed personal income tax rates in Budget and launched employment-linked incentives. The RBI has front-loaded monetary easing—100 basis points of repo rate cuts and 50 basis points of CRR reduction in quick succession. If the economy is truly growing at 8% with robust private consumption and the lowest inflation in over a decade—11-quarter average 2.5%, just 0.6% in July-September—why is every policy lever being pulled as if we are in the middle of a crisis?

The answer lies in a pile of contradictions that refuse to reconcile with the headline GDP print.

Begin with money supply, the lifeblood of any fast-growing emerging economy. When real GDP grows above 8%, nominal GDP is usually 13–14%, and the broad money, M3, historically expands 1.25–1.35 times faster than nominal GDP to meet heightened transaction demand. For the reported 8.8% nominal growth in the first half, money supply should be growing at 11–12%. Instead, it is expanding at a tepid 9.5%, pulled down by deposit growth of just 9.4%, the slowest in years. Deposit growth and household income growth move almost in lockstep. Slow deposits mean slow income growth. If money supply is growing at only 9.5%, the implied nominal GDP consistent with historical velocity relationships is 7.0–7.4%, not 8.8%.

Also Read: Crawling Rupee, Creeping Risks on the RBI’s December Tightrope

Corporate earnings tell a similar story. Four-quarter average sales growth of listed non-financial companies stands at a modest 5%—well below nominal GDP growth. The RBI’s own data for non-government non-financial companies show sales growth of 8% and operating profit growth of just 5.4% in the latest reported quarter. If the economy is expanding at 8% plus, where are the revenues?

Bank credit data are even more sobering. Incremental bank credit in the first half of 2025-26 declined by 4.9% year-on-year. Industrial credit deployment of ₹948 billion was 20.4% lower than a year ago despite industrial GVA supposedly growing 9.1% in the quarter. Personal loans (excluding gold and housing) plummeted 27%, and services-sector loans fell 33.7%. Interest income and expense growth in the banking system slowed to 3.4% and 5.6% respectively, half the pre-pandemic pace, while net interest margins continue to compress. Banks simply do not see the credit demand that an 8% economy should generate.

Households, the supposed engine of the 8% consumption growth, are in no position to splurge. Household debt has touched 48% of GDP, translating into 53% of personal disposable income. If only half the population is leveraged, a reasonable assumption, the debt burden on borrowing households is crushing. Index of Industrial Production data corroborate the weakness: consumer goods output grew just 1.3% in the second quarter and 0.8% in the first half. Even the most staple FMCG companies are reporting volume growth of only 3–4%. Power demand, the most reliable coincident indicator of industrial and urban consumption activity, rose a mere 1%, lower than pre-COVID trends. Petrol consumption grew 2.3%. None of these numbers scream “8% consumption boom.”

The contradictions are not random; they are multitudinous, consistent, and persistent across quarters and datasets. The IMF continues to give India’s national accounts a “C” grade for data quality. In the NSO’s own press note accompanying the 8.2% release, 12 out of 22 high-frequency indicators decelerated in the second quarter compared with last year, and only three out of eighteen physical-quantity indicators—cement, steel, and commercial vehicles—grew faster than 6%.

A key concern is the widening gap between headline GDP growth and underlying core GDP growth, which excludes residual discrepancies. Core GDP decelerated to a 9-quarter low of 4.1% July-September, indicating that unexplained residual components substantially inflate headline figures. This discrepancy suggests that real consumption and private capital expenditure may be overstated in official data, with the latter likely stagnant or declining in real terms despite nominal growth reflecting public sector investment.

What we are witnessing is a widening chasm between the statistical picture and lived reality. Economic agents, households, firms, banks, and foreign investors, are behaving exactly as they would in a 5–6% growth environment, not an 8% one. The rupee’s pro-cyclical weakness, pushing toward 90 despite heavy RBI dollar sales, is merely the latest symptom of this disconnect. Markets price reality, not press releases.

Policy makers, of course, cannot officially admit the reality. Hence the flurry of stimulus, GST cuts, cash transfers, rate cuts, CRR cuts, designed to manufacture the very demand that the GDP numbers claim already exists. The Chief Economic Advisor speaks of building “Strategic Global Indispensability” and “Domestic Invulnerability” in an age of trade fragmentation, but the urgent reflationary actions betray deep unease about the underlying momentum.

India is not unique in facing discrepancies between official statistics and ground reality, but the gap has rarely been this stark or sustained. As long as high-frequency indicators, corporate earnings, credit growth, power and fuel consumption, and household balance sheets all point southward while headline GDP gallops ahead, the paradox will only deepen. Foreign investors, staring at anaemic earnings growth and high valuations, have already begun voting with their feet.

Hopes are now pinned on the lagged effects of monetary easing and the post-October GST rate reductions. Yet structural impediments—global trade fragmentation, a leveraged household sector, anaemic private capex, and a banking system weighed down by regulatory cholesterol—will not dissolve with a few basis points of rate cuts or temporary tax relief.

The longer the statistical mirage persists, the greater the risk of policy error and market disillusionment. India may still be the fastest-growing large economy on paper, but it is increasingly an economy that almost no one inside or outside its borders actually feels. As the dichotomy becomes impossible to ignore, the camouflage will become less and less tenable.