India's GDP Grows 7.8% in Q1: Govt Data

India's economy grew by a stronger-than-expected 7.8% in April-June, its fastest pace in five quarters, before US President Donald Trump imposed tariffs that now cloud the outlook, threatening key exports like textiles.

The gross domestic product (GDP) growth in the first quarter of the ongoing fiscal year was mainly driven by good showing by the farm sector, and also helped by services like trade, hotel, financial and real estate, according to the latest government data released on Friday.

The previous highest pace of growth in the country's GDP was recorded at 8.4% during January-March 2024, as per the data.

India remains the fastest-growing major economy, as China's GDP growth in the April-June period was 5.2%.

The agriculture sector recorded a 3.7% growth, up from 1.5% in the April-June period of 2024-25, as per the data released by the National Statistics Office (NSO).

However, manufacturing sector growth increased marginally at 7.7% in the first quarter of FY26 compared to 7.6% recorded in the year-ago period.

Earlier this month, the Reserve Bank of India had projected the real GDP growth rate for 2025-26 at 6.5%, with 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.

Commenting on the official data, Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA, stated that after the unexpectedly strong Q1 FY2026, a lower YoY (year on year) momentum of government capex and the looming hit to exports from the US tariff and penalties, would dampen growth prints in the coming quarters, notwithstanding the balm offered by GST rationalisation.

"Amidst continuing uncertainty, we maintain our baseline GDP growth forecast at 6.0% for FY2026. The sharper than expected GDP growth print, which represents an acceleration over the previous quarter, has doused any expectations that the tariff related turmoil could prompt monetary easing in the October 2025 policy review," she added.

The NSO statement said, "Real GDP or GDP at Constant Prices in Q1 of FY 2025-26 is estimated at ₹47.89 lakh crore, against ₹44.42 lakh crore in Q1 of FY 2024-25, registering a growth rate of 7.8%. Nominal GDP or GDP at Current Prices in Q1 of FY 2025-26 is estimated at ₹86.05 lakh crore, against ₹79.08 lakh crore in Q1 of FY 2024-25, showing a growth rate of 8.8%." It also stated that mining & quarrying (-3.1%) and electricity, gas, water supply and other utility services sector (0.5%) has seen moderated real growth rate during Q1 of FY 2025-26.

Tertiary sector has recorded a substantial growth rate of 9.3% at Constant Prices in Q1 of FY2025-26, over the growth rate of 6.8% in Q1 of FY 2024-25.

Tertiary sector includes services like trade, hotel, transport, financial institutions, real estate, professional services, public administration and defence.

NSO also stated that the Government Final Consumption Expenditure (GFCE) has bounced back, registering a 9.7% growth rate in nominal terms during Q1 of FY 2025-26, over the growth rate of 4.0% in Q1 of FY 2024-25.

Real Private Final Consumption Expenditure (PFCE) has reported a 7.0% growth rate during the reporting quarter as compared to the 8.3% growth rate in the corresponding period of previous financial year.

Gross Fixed Capital Formation (GFCF) has recorded a 7.8% growth rate at Constant Prices, as against the growth rate of 6.7% in Q1 of FY25.

The discrepancies (differences in values calculated using different methods of GDP estimation) jumped to ₹1.11 lakh crore during the first quarter of this fiscal from ₹33,384 crore in the same period year ago.