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India’s GDP Grows 7.8% In Q1 Compared To 6.5% Last Year .
The GDP growth has beaten the estimate for the April-June quarter, which was 6.5%.
In some economic good news for India amid the US tariff conundrum, the GDP has grown by 7.8% in the first quarter of this financial year against an estimate of 6.5%. The figure is also 1.3 percentage points higher than in the same timeframe last year.
India’s Gross Domestic Product had grown 6.5% in the April-June quarter in the last fiscal and the growth in the same three-month period in 2025-2026 represents the fastest rise in five quarters. The previous highest GDP growth was 8.4% in the January-March quarter of 2024.
India’s Gross Domestic Product (GDP) grew by 7.8% in the first quarter (April-June) of the 2025-26 fiscal year. This represents a significant increase compared to the 6.5% growth observed during the same period in the previous fiscal year (2024-25).
This growth figure for Q1 FY26 exceeded the Reserve Bank of India’s (RBI) projection of 6.5% for the quarter. Economists polled by Reuters had also predicted a slower growth rate of 6.7% for the quarter. The 7.8% growth marks the fastest pace in the last five quarters.
Key highlights
Strong Performance: India’s economy started the 2025-26 fiscal year strongly, exceeding growth expectations.
Sectoral Growth:
Agriculture: Growth in the agriculture and allied sector improved significantly to 3.7% in Q1 FY26, compared to 1.5% in Q1 FY25.
Services: The services sector, or tertiary sector, emerged as the biggest growth driver, expanding by 9.3% in Q1 FY26 compared to 6.8% in Q1 FY25. This was particularly driven by activity in areas such as trade, hotels, transport, financial services, and public administration.
Manufacturing: Growth in the manufacturing sector saw a slight increase to 7.7% in Q1 FY26 compared to 7.6% in Q1 FY25.
Construction: The construction sector also registered a growth rate of 7.6% at constant prices in Q1 FY26. However, this represented a slowdown compared to the 10.1% growth observed in Q1 FY25.
Moderated/Subdued Growth:
Mining & Quarrying: This sector experienced negative growth of 3.1% in Q1 FY26, a decline from the 6.6% growth in the corresponding period of the previous year.
Electricity, Gas, Water Supply & Other Utility Services: This sector saw moderated real growth rate of 0.5% in Q1 FY26.
Expenditure Side:
Government Final Consumption Expenditure (GFCE): Saw a strong recovery with a 9.7% growth rate in nominal terms, significantly higher than the 4.0% growth in Q1 FY25.
Private Final Consumption Expenditure (PFCE): Grew by 7.0% in real terms, which was slower than the 8.3% growth seen in the same quarter of the previous year.
Gross Fixed Capital Formation (GFCF): Which measures investment in the economy, rose by 7.8% at constant prices in Q1 FY26, compared with 6.7% growth in Q1 FY25.
Economic context
Fastest Growing Economy: India retains its position as the world’s fastest-growing major economy, outpacing China, which recorded a 5.2% growth in April-June this year.
Potential Risks: Economists have flagged potential risks from newly imposed US tariffs, with concerns about a possible slowdown in exports in the coming quarters if trade tensions persist.
