An ET Poll last week had forecast a median 7.3% expansion in the quarter while the Reserve Bank of India had pegged it at 7%. To be sure, this is slower than the 8.6% expansion in the preceding quarter, but ahead of 6.9% in the corresponding three-month period in FY26.
Also Read: Q1 GDP print shows domestic momentum strong but global risks remain a concern: CEA Nageswaran
Prime Minister Narendra Modi said achieving this performance was a “Herculean feat” in the face of such stiff challenges. “The collective strength of our people ensured India delivered such growth despite oil price shocks and supply chain issues in the midst of global uncertainties,” he posted on X. “Doomsayers were doomed and India bloomed… yet again!”
Resilient Consumption
The growth was supported by strong investments, and robust manufacturing and services activity, official data released Monday showed.
Finance minister Nirmala Sitharaman credited the people of India and their hard work, as well as the Centre’s policies. “Reforms undertaken by the NDA government, together with an agile management of the economy, are bearing results,” she wrote on X.
Nominal GDP, a measure of the economy at current prices without adjusting for inflation, grew to an eight-quarter high of 10.3% compared with 8.1% in the year before.
“What we are witnessing is continued resilience in the Indian growth performance,” said chief economic adviser (CEA) V Anantha Nageswaran. “The quarterly real GDP numbers, in general, after a lull towards the latter part of 2024-25, have picked up quite well and have weathered global uncertainties rather well.”
Also Read: Doomsayers doomed, India bloomed: PM Modi after Q1 GDP growth quickens to 7.8% amid global tensions
The latest figures mark the third quarterly GDP release under the revised national accounts series, which uses a new base year and broader coverage. The revised methodology also incorporates double deflation for the first time.
ET Online“There have been various apprehensions raised about double deflation, and it only shows how resilient our economy is, and how resilient our numbers are, that the changes are marginal,” said statistics ministry secretary Saurabh Garg.
Gross value added increased 8.2% year-on-year in the June quarter, up from 7% in the same period a year earlier. “Economic activity remained robust during the April-June quarter despite the adverse impact of the West Asia conflict on some sectors as well as the unfolding impact of the uneven monsoon,” said Aditi Nayar, chief economist at ICRA.
Sakshi Gupta, principal economist at HDFC Bank, said growth was driven by resilient domestic consumption, continued government support through spending and investment, and healthy export performance.
Based on revisions by the statistics ministry, FY26 growth estimates were raised slightly to 7.8% from 7.7% earlier, while for FY25 was increased to 7.2% from 7.1%.
ET OnlineInvestment, services
Gross fixed capital formation, a measure of investment activity, rose 11.9% year-on-year in the June quarter, more than double the 5.8% growth recorded in the same period last year.
Private consumption grew 7.1% compared with 6.8% in the year before, while government spending increased 4.3%, slightly lower than 4.5% a year ago.
“All three sectors have contributed,” the CEA said. “Agriculture has contributed slightly less, but manufacturing and services have done quite well in the first quarter in general, despite the West Asia-related uncertainties, partly because of the government’s efforts to make sure that input provisions were not affected by the war in West Asia.”
Manufacturing remained a major growth driver, expanding 9.2% in the quarter, compared with 7.9% in the preceding one and 8.3% in the year earlier. Construction activity expanded 7.7%, up from 5.2% a year earlier. Electricity, gas, water supply and other utility services grew 8.9%, compared with a contraction of 1.8% in the year before.
“Manufacturing GVA exceeded expectations, likely reflecting the uptick in volume growth between these quarters, amid an unfavourable base,” said Nayar.
Agriculture growth, however, moderated to 3.6% from 4.4% in the corresponding period in FY26.
The services sector emerged as the strongest performer, growing 10% in the June quarter, compared with 8% a year earlier.
Within services, financial, real estate, ownership of dwellings, IT and professional services recorded the fastest growth at 12.1%.
Manufacturing and financial, real estate and professional services are likely to remain key sources of support for growth through the rest of FY27, said Devendra Kumar Pant, chief economist at India Ratings & Research (Ind-Ra).
Exports rose 12% during the April-June period, sharply higher than the 6% growth recorded a year earlier. Imports, meanwhile, declined 1.1%, compared with 5.3% growth in the same period last year. “The key risks are now less about a softer domestic story and more about the persistence of high oil prices, rupee weakness and tighter global financial conditions,” said Radhika Rao, senior economist & executive director at DBS Bank.
Outlook
Economists expect India’s economy to grow by around 7% in FY27, likely marking the fourth consecutive year of growth expansion above that number.
HDFC Bank raised its FY27 GDP growth forecast to 7.1% from 6.8%, citing the stronger-than-expected first-quarter performance and a broadly favourable monsoon during the kharif season, which could limit risks to rural demand.
CareEdge Ratings raised its growth estimate to 7.3% from 7%, while Ind-Ra expects it to exceed 7%, compared with its earlier forecast of 6.8%. However, risks to the outlook remain, both domestically and globally.