India’s 7.8% Growth Is Real, But Who Feels It?

By Govindraj Ethiraj

India’s economy officially grew at a roaring 7.8% last quarter, or so the statisticians in New Delhi would have the world believe. 

The headline figure prompted predictable triumphalism from government ministers, only to trigger an equally theatrical row when a former top finance bureaucrat mistakenly cited a botched baseline to argue actual growth was a paltry 2.6%. 

Opposition parties pounced, the airwaves erupted, and a technical statistical release degenerated into standard political theater.

The episode exposed a deeper vulnerability in India’s economic narrative: a persistent trust deficit in state-issued data. 

The GDP Trust Gap

National accounting is inherently complex, relying on proxies, deflators, and subjective modeling. 

But when methodological opacity meets political spin as it clearly did this time, statistics cease to inform policy and become tools of propaganda. 

Headline proxies that we track, including booming luxury real estate, soaring automobile sales, and resilient corporate earnings, suggest the economy is expanding. 

Yet when state-issued GDP figures require endless ideological defense, public suspicion naturally follows.

The far more consequential question is why a nation compounding at 7.8% feels so surprisingly sluggish to the people running its factories and buying its goods. 

Corporate India Holds Back

Government officials routinely scold corporate leaders for failing to open their checkbooks, pointing out that industrial capacity utilisation sits near 75%.

I was witness to one such remonstration just last week in a private gathering in Mumbai where a former finance ministry official and former colleague to said former finance secretary called out business leaders `sitting at the back’ for not investing enough.

The one who I could spot sat composed and unmoving. 

But private promoters are not foolish. 

Behind closed boardroom doors, chief executives point to tepid mass-market consumer demand and the persistent friction of doing business. 

The Consumption Divide

Growth is real, but it is deeply bifurcated, driven by the top tier of affluent consumers while broad-based purchasing power lags. 

A few years ago, the head of a major paint manufacturer publicly noted that his firm’s sales had decoupled from official GDP numbers, a rare moment of corporate candor he was quickly pressured to walk back.

Compounding this domestic asymmetry are mounting external headwinds. 

Heightened trade friction with the US and escalating conflict in West Asia have pushed up input costs and injected profound uncertainty into global trade. 

For an industrialist weighing a multi-decade capital commitment, a headline GDP figure carries far less weight than rising freight tariffs, energy inflation, and fragile global supply chains.

When Growth Meets Reality

Ultimately, the gap between official statistics and public sentiment is grounded in daily experience. 

New Delhi celebrates aggregate output, but millions of citizens scattered across the country experience the economy through urban decay. 

A resident navigating Mumbai or Delhi through clogged, garbage-ridden streets, broken pavements and persistent smog finds little comfort in a quarterly GDP report. 

When basic civic infrastructure deteriorates, high growth numbers feel like an abstraction dreamed up by mandarins in the capital.

If India wishes to convince its citizens and investors that its economic rise is real, its leaders must understand that prosperity cannot be mandated by statistical releases. 

True economic dynamism is not measured in fractional GDP gains, but in functional cities, predictable policy, and a rising tide that reaches beyond the affluent elite. 

Until the quality of everyday life catches up with the headline figures, 7.8% will remain a number to be debated on television rather than felt on the street.

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$782 million

That’s how much foreign portfolio investors (FPIs) pulled out of Indian equities so far in September, according to National Securities Depository Ltd (NSDL) data. The selling marked a reversal after two consecutive months of FPI buying.

Origin: FPIs turned sellers as crude oil prices rebounded, US bond yields rose and the dollar strengthened, reducing the appeal of emerging-market assets. India’s relatively expensive equity valuations also remain a concern for foreign investors.

Recent data:

• August: FPIs invested $3.1 billion, the highest monthly inflow in nearly two years.

• July: FPIs invested $2.1 billion, ending a four-month selling streak.

• March-June: FPIs pulled out $27.8 billion over four consecutive months.

• 2026 so far: FPIs have withdrawn about $24.6 billion from Indian equities.

Future: Global bond yields, the dollar, crude oil prices and India’s equity valuations will remain key drivers of FPI flows. Analysts say investors will also watch developments in West Asia and global monetary-policy expectations closely.

India Fuels Europe's Diesel Gap

India has become a critical diesel supplier to Europe, providing around 60% of the roughly 200,000 barrels per day transiting the Bab-el-Mandeb strait in August, as Russian and US exports falter.

Overview: Russian seaborne diesel exports averaged just 150,000 bpd in August, 81% below the five-year average, hit by Ukrainian drone strikes on refineries and Black Sea export terminals. Even a possible easing of Russia's export ban is unlikely to trigger a quick rebound. Meanwhile, US diesel shipments to Europe fell nearly 35% within August itself.

Critical Moment: This growing reliance on India comes even as crude imports into Indian refineries dropped to 3.8 million bpd, down from 4.8 million a year earlier, raising questions about the sustainability of India's export flows as Europe heads into peak winter demand with low inventories.

Beyond The SUV Boom

Even as SUVs strengthen their dominance in the industry, Maruti Suzuki is betting on continued relevance for premium hatchbacks. This was reflected in its updated Baleno launch at Rs 6.09 lakh, to bolster the Nexa retail channel. Overall, carmakers are backing multiple technologies rather than betting only on electric vehicles (EVs).

The Lead: Hyundai's CEO Tarun Garg said hybrids could become the "next diesel," pointing to strong potential in rural markets. "There is hardly any difference now between the Tier-2 and Tier-3 road infrastructure and Tier-1," he said. He expects rural contribution to make up about 30% of its total sales within three-four years.

Setting: With the festive season near, new SUV and EV launches are set to heat up competition industry wide. Maruti expects the passenger vehicle industry to grow around 10% this financial year, helped by GST 2.0, lower interest rates, and better affordability driving a strong recovery in entry-level car demand.

Jan Dhan Zero Balance

More than one in four accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) is now inoperative, highlighting the gap between opening bank accounts and keeping them active.

Fast Facts: An RTI response showed that 15.37 crore Jan Dhan accounts were classified as inoperative, while 5.72 crore accounts had zero balance, as of August 12, 2026. Uttar Pradesh recorded the highest number of both zero-balance and inoperative accounts.

Origin: The government launched PMJDY in August 2014 as a national mission to bring unbanked households into the formal financial system. The scheme provides basic bank accounts and connects account holders with services such as RuPay cards, insurance and other financial products. It also supports the broader Jan Dhan-Aadhaar-Mobile (JAM) framework for government benefit transfers.

PMJDY has dramatically expanded bank-account ownership, with more than 59 crore accounts now open. But the latest figures show the other side of that expansion: many accounts remain inactive or hold no money, raising the scheme’s success into serious question.

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