Q2 GDP at 8.2%: Deepak Shenoy breaks down India’s strengths and hidden weak spots

India’s latest GDP print presents a mixed picture of strength and caution. While the economy continues to record strong real GDP growth of 8.2%, nominal GDP growth of 8.73% is “a little too low,” according to Deepak Shenoy, CEO of Capitalmind AMC, who revealed the figures in a series of detailed posts on X.

Shenoy’s breakdown comes as multiple sector- and component-level datasets from MOSPI show how different drivers of the economy are performing – and what that means for India’s path to $4 trillion.

Manufacturing and financial services excel

Sector charts show clear outliers:

• Manufacturing grew 9.1% last quarter – its best performance in recent cycles.
• Financial services also rose, reaching 10.2%, cementing its position as one of the largest contributors to India’s economic structure.
• Trade & Transportation, another heavyweight, posted strong mid- to high-single-digit growth across the quarters.
• Personal services, although historically strong, have seen some decline in growth momentum.

“The largest ones in the economy are financial services, trade and manufacturing. The rest are relatively small,” Shenoy stressed. The composition graph reinforces this dominance: financial services and trade/transport occupy a steadily increasing share of GDP over the past five years.

Consumption and investments are fixed

One of the most important findings of Shenoy’s analysis is the strength of domestic demand:

• He noted that private consumption, which accounts for 55% of India’s GDP, grew by about 8%, which is a “decent” rate.
• Investments, which contributed 34% of GDP, also registered healthy growth, exceeding 7% year-on-year.

However, exports showed weaker momentum compared to imports, and inventories saw a sharp contraction of 11.5% – a sign that demand is outpacing inventory accumulation or that companies are cautious about overstocking.

Meanwhile, government spending remained weak and even contracted in the latest quarter.

India at Rs 345,000 crore, still shy of $4 trillion

The twelve-month GDP chart shows that India continues its steady rise post-pandemic, reaching Rs 345,000 crore at market prices.

Shenoy noted:

• At Rs 345,000 crore, with an exchange rate of Rs 89.7 per dollar, the GDP comes to just under $3.5 trillion.
• After correcting previous calculations, he added: “We have reached $3.84 trillion… We are still slightly below the level of $4 trillion.”

The $4 trillion threshold, frequently cited in political and media narratives, remains within reach but has not yet been achieved.

Real versus nominal: a worrying point

An important insight comes from the trend of real versus nominal growth. Historically, nominal GDP has grown several percentage points faster due to the effects of inflation and pricing. But the latest figures show nominal growth of only 8.73%, barely higher than real growth of 8.2%.

Shenoy pointed to this gap, describing the nominal value as “a little too low” – a sign of weak price growth or tightening conditions in certain sectors.

The bigger economic picture

From the composition graph, India’s GDP remains highly services-based, with financial services, trade and transport, and manufacturing together forming the backbone of economic activity.

Agriculture and mining remain relatively small contributions, although agriculture shows moderate and stable growth, while mining has been volatile.

Shenoy’s analysis suggests an economy:

• Rapid growth in real terms,
• Structural shift towards services and manufacturing,
• Driven primarily by consumption and investment,
• But it faces pressure on pricing, exports and inventory build-up.

The Indian economy grew by 8.2% in the July-September quarter, recording the fastest growth in six quarters, as manufacturing output accelerated ahead of an expected rise in demand following the GST rate cut, according to official data.

The latest GDP reading exceeded the growth recorded in the previous quarter by 7.8% and improved sharply from 5.6% in the same period last year. The manufacturing sector — which accounts for about 14% of the country’s gross domestic product — rose 9.1% in the second quarter, a big jump from the 2.2% growth seen in the corresponding quarter of the previous fiscal year.