India beats estimates to log 7.8% growth in Q1 FY26

In a reflection of a continuing growth momentum, India posted gross domestic product (GDP) growth of 7.8% in the first quarter of the financial year 2025-26, up from 6.5% in the same quarter of the previous fiscal.

The GDP print has surpassed all estimates, which pegged GDP to be around 6.6%–7% in the April–June period of the current financial year.

"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%,” said a release from the government.

“Real GVA in Q1 of FY 2025-26 is estimated at ₹44.64 lakh crore, against ₹41.47 lakh crore in Q1 of FY 2024-25, registering a growth rate of 7.6%. Nominal GVA in Q1 of FY 2025-26 is estimated at ₹78.25 lakh crore, against ₹71.95 lakh crore in Q1 of FY 2024-25, showing a growth rate of 8.8%,” the release added.

“Agriculture and allied sector has observed the real GVA growth rate of 3.7%, as compared to the growth rate of 1.5% registered in Q1 of last financial year. Secondary sectors, prominently manufacturing (7.7%) and construction (7.6%) sector has registered above 7.5% growth rate at constant prices in this quarter,” said the release.

"Mining and 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. Government final consumption expenditure (GFCE) has bounced back, registering 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,” it added.

“Real Private Final Consumption Expenditure (PFCE) has reported 7.0% growth rate during Q1 of FY 2025-26 as compared to the 8.3% growth rate in the corresponding period of previous financial year,” it said.

Gross Fixed Capital Formation (GFCF) has recorded a 7.8% growth rate at Constant Prices, over the growth rate of 6.7% in Q1 of FY 2024-25, it added.

It may be noted that in the previous mometary policy review, RBI had said, “The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook.”

“The real GDP growth for 2025-26 is projected at 6.5 per cent, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent. Real GDP growth for Q1:2026-27 is projected at 6.6 per cent. The risks are evenly balanced,” the RBI added.

On the back of economic performance, S&P Global Ratings has raised its long-term sovereign credit ratings on India to 'BBB' from 'BBB-', and its short-term ratings to 'A-2' from 'A-3'. The agency said the impact of US tariffs on the Indian economy will remain "manageable". The upgrade came in the backdrop of continued policy stability, high infrastructure investment and long-term growth prospects, according to the agency.  

“The stable outlook reflects our view that continued policy stability and high infrastructure investment will support India's long-term growth prospects. That along with cautious fiscal and monetary policy that moderates the government's elevated debt and interest burden will underpin the rating over the next 24 months," S&P Global Ratings said.  

Going forward, there are concerns on the growth numbers in the coming quarters in the wake of the 50% tariff imposed by the US. The government is currently assessing the sectoral impact and is likely to come out with the relief package for the affected sectors of the economy.