Q1 GDP growth reflects strengthening momentum in the economy, say finance ministry sources

Gross domestic product (GDP) growth of 7.8% in the first quarter of the current financial year reflects “strengthening momentum” in the economy, said sources in the finance ministry. As per the GDP print for Q1 FY26, issued by the government today, the Indian economy expanded to ₹47.89 lakh crore, against ₹44.42 lakh crore in Q1 of FY 2024-25. 

“Real GDP grew by 7.8% in Q1 FY26, reflecting strengthening momentum in the economy, anchored by strong macroeconomic fundamentals. The high frequency indicators had been green-signalling the potentially higher numbers,” said sources.

“As you can see, supply-side growth was driven by manufacturing, construction, and services, reflecting an all-around growth. On the demand side, robust expansion in private final consumption expenditure (PFCE 7.0%) and gross fixed capital formation (GFCF 7.8%) underpinned performance. The PFCE’s share in GDP rose to 60.3%, the highest first-quarter level in 15 years. The government’s capital expenditure also sustained the momentum in GFCF’s growth,” sources pointed out.  

According to the ministry of statistics and programme implementation, the 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 the last financial year. “Secondary sectors, prominently manufacturing (7.7%) and construction (7.6%) sectors, have registered above 7.5% growth rate at constant prices in this quarter,” said the release from the ministry.

“Mining and quarrying (-3.1%) and electricity, gas, water supply and other utility services sector (0.5%) have seen a moderated real growth rate during Q1 of FY 2025-26. 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,” it added.

Earlier in the evening, addressing a press conference on the GDP numbers, chief economic advisor V Anantha Nageswaran said the Indian economy defied the expectations of a modest growth of around 6.5% - 7% which was broadly the consensus range. "India’s numbers are far higher in comparison to other countries that have declared numbers for the April-June quarter GDP numbers. The growth was particularly broad-based,” he said.