New Delhi: India’s GDP growth is projected at 6.3 per cent in current fiscal (FY26) despite external headwinds, an HSBC report said on Wednesday, adding that with 70 per cent of the indicators growing positively, the Q2 growth (April-June) is trending at 6.8-7 per cent, with the informal sector taking the lead.
HSBC Global Investment Research has updated its 100 indicators framework, which maps high frequency indicators to various sectors, and gives a thorough and sequential read on growth. “After an amazing April came a measured May with 67 per cent of the indicators growing positively (compared to 72 per cent in April). Still, from a quarterly perspective, Q2 is doing better than Q1 2025 (70 per cent vs 67 per cent),” the findings showed.
If this trend continues into June (as is looking likely so far, based on the release of 20 per cent of the data we track), “GDP growth could come in at the 6.8-7 per cent ballpark”, said the report. Informal sector consumption is taking the lead. Key indicators grew positively on a sequential basis in May. These include two-wheeler sales, non-durables production, non-cess GST collection, rural terms of trade, and real rural wages.
Meanwhile, formal sector consumption was more mixed; some indicators holding up (demand for petrol, consumer imports, and durables goods production), while others were weaker like passenger vehicle sales. “A rise in government spending was an added bonus, focused not just on consumption, but also capex,” the report mentioned.
India's capital expenditure surged 54 per cent in April-May FY26, driven by strong non-tax revenues and RBI surplus. According to the report, three data points reveal a sharp pivot from formal to informal. “One, indirect tax collection (proxy for informal consumption) is outpacing direct tax collection after a long wait. Two, overall credit growth is slowing, but within that, credit to MSMEs is bucking the trend.
Three, RBI corporate database indicates that salary growth at small firms is outpacing large firms,” it added. In fact, two major pivots will likely define FY26. One, from investment to consumption. During a time of global uncertainties, investment rarely does well.
Two, within consumption, as highlighted above, from formal to informal. “Falling inflation has played a leading role here. It has improved real purchasing power, thereby stoking informal sector consumption, which makes up two-thirds of the consumption pie,” said the report.
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