Source CNBC
NEW DELHI — The Indian economy demonstrated remarkable resilience by expanding 7.8% in the April-June quarter (Q1) of the 2026-27 financial year, significantly surpassing both market expectations and the Reserve Bank of India’s (RBI) 7.0% forecast.
According to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday, real Gross Domestic Product (GDP) was estimated at ₹81.36 lakh crore in the first quarter, up from ₹75.46 lakh crore in the same period last year. This 7.8% growth represents a marked improvement over the 6.9% expansion recorded in the corresponding quarter of the previous fiscal year. Meanwhile, nominal GDP—which is not adjusted for inflation—posted double-digit growth of 10.3%.
Sectoral Highlights
The stronger-than-expected economic performance was largely driven by robust activity across several key sectors:
Manufacturing: Accelerated to 9.2% growth, up from 8.3% during the same quarter last year.
Services: The tertiary sector expanded by 10%, heavily buoyed by a 12.1% spike in financial, real estate, IT, and professional services.
Utilities: The electricity sector saw a dramatic turnaround, jumping 8.9% after contracting by 1.8% in the same period last year.
Gross Value Added (GVA), a metric that measures the actual value generated across different sectors by excluding product taxes and subsidies, rose by 8.2% in real terms—further confirming the broad-based cyclical upturn in the economy.
Defying Global Headwinds
The impressive growth figures arrive despite significant global economic challenges, including supply chain disruptions, elevated raw-material costs, and oil price shocks stemming from the ongoing US-Iran conflict.
Prime Minister Narendra Modi hailed the 7.8% growth as a “herculean feat,” attributing it to the collective strength of the Indian people and the economy’s ability to withstand external vulnerabilities. Finance Minister Nirmala Sitharaman also weighed in, stating that the government’s agile economic management and ongoing structural reforms were successfully bearing fruit.
While some economists warn that sustaining this rapid pace may become more difficult as the base effect normalizes and external risks persist, the strong start has already prompted analysts to rethink their annual outlooks. Following the Q1 data print, several financial institutions are upwardly revising their full-year FY27 growth forecasts closer to the 7.0% mark, compared to the RBI’s current projection of 6.7%.
The next set of GDP estimates, covering the July-September quarter, is scheduled for release on November 30, 2026.
