India’s growth engine fires on capex and exports even as key sectors like agriculture, mining slow

Exports and gross fixed capital formation (capex) drove India’s 7.8% GDP growth in the first quarter (Q1) of the current financial year while key sectors such as agriculture, mining, trade, and transport recorded a noticeable decline.

According to official data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday, gross fixed capital formation (capex) growth doubled from 5.8% in Q1FY26 to 11.9% in Q1FY27. Similarly, exports also recorded double-digit growth, rising from 6% to 12% during the same period.

However, on the other hand, the growth of the agriculture sector saw a decline from 4.4% in Q1FY26 to 3.6% in Q1FY27, while the mining sector growth declined significantly from 12.4% to 2.4% during the same period.

According to the experts, the growth has been led by the significant capital formation. “Growth has been spearheaded by capital formation which has increased to 34.3% in nominal terms from 31.4% last year with growth of 20.4%. This is a major takeaway as this involves both private and government expenditure with the former being driven by data centres and power besides metals,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

Despite agriculture growth has witnedded a decline, Sabnavis suggested that this should not be seen as negative as this is residual rabi and more of allied activities which were affected by floods.

“Agriculture is lower than last year at 3.6% but one cannot read much into this number as this is residual rabi and more of allied activities which were affected by floods. Mining growth was negative mainly due to the high base effect as well as heavy rains and flooding which impeded activity,” he explained.

According to him, manufacturing growth has been very impressive at 9.2% which comes over 8.3%. Here it is again the infra based companies which have contributed to growth based on the results of companies for Q1. 

India’s economy expanded at a robust 7.8% 

In terms of overall GDP growth, India’s economy expanded at a robust 7.8% in the first quarter of the current financial year, up from 6.9% growth recorded in the corresponding quarter of the previous fiscal year.

“Q1 FY27 GDP growth surprised positively at a robust 7.8% YoY, reflecting broad-based strength across the Indian economy. Growth has been supported by limited pass-through of higher crude prices to retail fuel prices, which has helped cushion household purchasing power. The GST cuts announced last year continue to provide a structural tailwind to domestic demand,” said Vikram Chhabra, Senior Economist, 360 ONE Asset.

In real terms, GDP at constant prices was estimated at ₹81.36 lakh crore in Q1 FY27, compared with ₹75.46 lakh crore in the same quarter of FY26, registering growth of 7.8%. Nominal GDP, measured at current prices, rose 10.3% to ₹88.27 lakh crore from ₹80 lakh crore a year earlier.

Meanwhile, real gross value added (GVA) grew at an even faster pace of 8.2%, reaching ₹73.82 lakh crore in Q1 FY27, compared with ₹68.21 lakh crore in the corresponding quarter of the previous financial year. Nominal GVA rose 11.5% to ₹80.53 lakh crore from ₹72.24 lakh crore in Q1 FY26.