NEW DELHI: The Indian economy has kicked off the fiscal year 2025-26 with robust growth, as the latest data from the National Statistics Office (NSO) reveals a 7.8% increase in Real GDP for the first quarter (April-June). This marks a significant acceleration from the 6.5% growth rate recorded during the same period in the previous fiscal year.
The strong performance is largely attributed to a buoyant Services sector, which registered a substantial Real GVA growth of 9.3%. This sector's strong showing helped propel the overall Real Gross Value Added (GVA) to a growth rate of 7.6% for the quarter.
The Q1 GDP growth beats most estimates as analysts had predicted the economy to grow at 6.5-7% during the April-June quarter.
Manufacturing and Construction sectors both demonstrated robust growth, with GVA rates of 7.7% and 7.6%, respectively. The Agriculture and Allied sector also showed healthy growth, rising to 3.7% from 1.5% in the previous year's Q1.
Aditi Nayar, chief economist, ICRA Ltd, said: "India's GDP growth accelerated to a robust five-quarter high 7.8% in Q1 FY2026 from 7.4% in Q4 FY2025, contrary to the expectations of a sequential slowdown as signaled by high frequency indicators. The 7.6% growth in GVA was boosted by a sharper than anticipated expansion in manufacturing and the services sector, even as agriculture and mining & quarrying underperformed our forecasts”.
She added that the outlook for private consumption is bolstered by developments like income tax relief, 100-bps rate cut, healthy progress of kharif sowing, and upcoming rationalisation of GST slabs, even as discretionary purchases by households could be deferred in Q2, until tax cuts are implemented during the festive season.
Government Final Consumption Expenditure (GFCE) bounced back strongly, growing by 9.7% in nominal terms, a significant increase from the 4.0% growth in Q1 of FY 2024-25. Private Final Consumption Expenditure (PFCE) also grew, recording a 7.0% growth rate in real terms, while Gross Fixed Capital Formation (GFCF) – spending in infrastructure and asset creation -- saw a robust 7.8% increase against 6.7% in the same quarter last year.
In absolute terms, the Real GDP for Q1 of FY 2025-26 is estimated at ₹47.89 lakh crore, up from ₹44.42 lakh crore in the same quarter last year. The Nominal GDP for the quarter stands at ₹86.05 lakh crore, representing an 8.8% growth rate.