India's economy may lose some momentum in the second half of the fiscal year, but not enough to derail a robust annual expansion, economist Madan Sabnavis said, projecting that growth could average about 7.2% for the full year even if the pace slips below 7% in the latter months.
Sabnavis' assessment points to a familiar pattern in India's post-pandemic growth trajectory: periods of strong quarterly performance followed by moderation as base effects fade, external demand softens, or domestic consumption normalises. His forecast of 7.5% to 7.6% growth in the second quarter suggests that the economy has retained considerable underlying strength, supported by resilient services activity, public capital expenditure, and steady domestic demand.
Second-Half Moderation
Sabnavis said the more important signal is not whether growth briefly dips below 7% in the second half, but whether the economy can sustain an annual average that remains well above most major emerging markets. A full-year print of 7.2% would still place India among the fastest-growing large economies globally, reinforcing its position as a key engine of world growth.
The forecast also reflects the uneven nature of India's expansion. Manufacturing has at times lagged services, rural demand has remained sensitive to inflation and monsoon conditions, and private investment has not yet fully matched the scale of public spending. Even so, the overall growth profile has been strong enough to absorb these pressures without a sharp slowdown.
For policymakers, a second-half deceleration would not necessarily be alarming if it comes after a strong first half. Economists often caution that quarterly volatility can obscure the broader trend, especially in an economy as large and diverse as India's. What matters more, Sabnavis implied, is whether growth remains broad-based and whether inflation, interest rates and fiscal conditions stay aligned to support activity.
Quarter Two Strength
The economist's estimate of 7.5% to 7.6% growth in the second quarter is notable because it suggests the economy may have outperformed many expectations despite global uncertainty. India has faced a mixed external backdrop, including slower global trade, geopolitical tensions, and uneven commodity prices, yet domestic demand has continued to provide a cushion.
Government spending on infrastructure has been a major support, helping sustain construction, logistics and related industries. Services, particularly finance, transport and digital-led activity, have also remained resilient. At the same time, the broader economy has benefited from a relatively stable macroeconomic framework compared with several peers, allowing growth to continue even as interest rates remain elevated.
Sabnavis' longer-term view is equally significant. By placing India's potential growth rate at around 8%, he is effectively arguing that the economy is still operating below its structural ceiling, leaving room for faster expansion if productivity, investment and employment generation improve. That estimate implies that India's current growth is strong, but not yet fully maximised.
Potential Near Eight
A potential growth rate near 8% carries important policy implications. It suggests that India can expand faster without necessarily overheating, provided supply-side constraints are eased and private investment strengthens. It also underscores the importance of maintaining fiscal discipline while continuing to invest in infrastructure, manufacturing capacity and human capital.
For markets, the message is twofold. First, a temporary dip below 7% in the second half would not automatically signal weakness if the annual average remains healthy. Second, the economy's medium-term trajectory still appears favourable, with enough momentum to support corporate earnings, tax collections and investment sentiment.
Sabnavis' comments arrive at a time when investors and policymakers are closely watching whether India can convert strong headline growth into more durable, job-rich expansion. The answer will depend not only on quarterly GDP prints, but also on the quality of growth, the pace of private capex and the resilience of household demand.
For now, the economist's outlook suggests a simple but important conclusion: India may slow from its recent pace, but it is still growing fast enough to keep the broader macroeconomic story intact.