Growth momentum continues in Q1FY27 despite global challenges: Finance Ministry
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The Union finance ministry today said the Indian economy sustained growth momentum in the first quarter of the current financial year even as some high frequency indicators witnessed some softening in momentum. The ministry said India will have to reinvent itself and reimagine its response to the global imperatives for achieving strategic leverage.
“Notwithstanding the uncertain global environment, the Indian economy sustained its growth momentum during the first quarter of FY27, supported by resilient domestic demand,” the ministry said in the monthly economic review for July.
“However, some high-frequency indicators, such as e-way bill and manufacturing PMI witnessed some softening in momentum. The service sector strengthened in Q1 of F27, driven by supportive domestic and external demand conditions,” the report added.
“There is no doubt that the economy has continued to demonstrate resilience amid a challenging global backdrop. Nonetheless, global challenges show no sign of letting up, with uncertainties mounting. So, India has to reinvent itself and reimagine its responses to global imperatives if it has to achieve strategic leverage,” it said.
“As external conditions evolve, the continued interplay of domestic reforms, prudent macroeconomic management and swift policy responses, backed by consistent on-ground implementation will remain important in shaping India's economic trajectory,” it added.
The ministry report said downside risks to the global growth forecast of the IMF's July 2026 World Economic Outlook continue to persist. IMF's July 2026 World Economic Outlook projected global growth to moderate from 3.2 per cent in 2025 to 3.0 per cent in 2026. “While risks are more balanced than in the April 2026 WEO, they remain tilted to the downside, with renewed conflict in the Middle East, trade fragmentation, a correction in technology-driven expectations and limited policy buffers posing key risks to global growth,” the report said.
The ministry said that during the month, strategic manufacturing initiatives gathered further momentum with the inauguration of the CG Semi OSAT facility; the approval of Semicon 2.0 and the Mobile Phone Manufacturing Scheme; continued progress in critical minerals, coal gasification and shipbuilding; and a landmark achievement in the commercial space sector with Skyroot Aerospace's successful orbital launch.
“Taken together, these developments reflect continued progress in strengthening domestic manufacturing capabilities, enhancing supply-chain resilience and reducing dependence on concentrated import sources across strategic sectors,” the review report added.