Industry, economists hail strong growth as India's Q1 GDP growth hits 5-quarter high

India’s economy grew by five-quarters high to 7.8% in Q1 FY26 compared to 6.5% growth recorded in Q1 FY25, according to the government data released today. The more-than-expected growth is broad-based, except mining and electricity. The nominal GDP growth came in at 8.8%, while core GVA (overall GVA ex-agriculture and public finance) grew 8% YoY in Q1 FY26 compared to 7.1% YoY in Q1 FY25, indicating the continuing growth momentum in the private sector. Manufacturing and services sectors remain the star performers in Q1.

While the agriculture sector grew 3.7%, while industry sector remains submissive at 6.3% due to negative growth in mining (-3.1%) and almost negligible growth in electricity, gas, water supply and other utility services (0.5%). Manufacturing showed strong growth (5-quarter high) in Q1 FY26, growing by 7.7% YoY, compared to last year's growth of 7.6%. Services also grew 9.3% due to 9.5% in ‘financial, real estate & professional service’ sector’.

Here are top industry reactions on India's Q1 FY26 GDP numbers:

1. Sanjay Nayar, President, ASSOCHAM, termed India's Q1 GDP growth numbers "stellar", which showcased remarkable strength and stability. "This performance reflects both effective policy measures and resilient domestic demand. Such a dynamic start to the fiscal year not only brightens the economic outlook but also reinforces confidence in India’s journey toward sustained and inclusive growth."

2. Hemant Jain, President, PHDCCI, said India’s economy has maintained a resilient growth trajectory, highlighting India’s steady pace towards Viksit Bharat@2047. "This growth was largely driven by an increase in the tertiary sector followed by manufacturing and agriculture sectors...manufacturing grew by 7.7%, accompanied with robust growth in the tertiary sector at 9.3%." Jain also said India’s growth was boosted by growth in government final consumption expenditure growing by 7.4% during the same period, he said.

3. Jyoti Vij, Director General, FICCI, said the GDP growth figures are a testament to the Indian economy’s resilience. "The strong growth has come at a juncture when the country is facing significant global headwinds and will help boost business sentiments. Indian industry will be able to navigate the near-term external challenges on the back of strong domestic demand, opening up of new market opportunities through our recent trade agreements as well as various policy measures, particularly the upcoming rationalisation of GST rates."

4. Soumya Kanti Ghosh, Member 16th Finance Commission and Group Chief Economic Adviser, SBI, says the strong growth in private consumption at 7% begs the question of a GST cut. However, he agreed that, as past experience shows, GST rates have been rationalised from time to time as in July 2018 and October 2019. "The vision of Honourable PM of a clutter free GST regime in the form of rate rationalisation has long term benefits for overall economy. Thus, the arguments of GST rate rationalisation is in a larger interest and not strictly related to invigorating consumption growth as many would believe so."

5. Rajani Sinha, Chief Economist, CareEdge Ratings, says the revival in domestic demand, despite global headwinds, is critical—not only for recovering private capex momentum but also for cushioning the potential loss of export amidst elevated tariffs. "Given the upside surprise in the first-quarter numbers, we have revised our FY26 GDP growth projection upward to around 6.5% under the base-case scenario. This assumes a reduction in U.S. tariffs on Indian imports to around 25% (with the removal of additional tariff of 25%). Government support to consumption in terms of GST reforms and transmission of the previous rate cuts should further strengthen consumption."