A Bittersweet Q1 for Economy

The April to June quarter (Q1FY26) has been an uneven period for economic activity, with factory output, exports and private capex hitting a rough patch, even as the farm sector and services like transport and construction have picked up pace along with government capex.

- SHIVA RAJORA

While the spike in global uncertainties as well as unseasonal rains and an early monsoon have hurt industrial output, urban demand continues to face headwinds and though rural demand is accelerating, it is still patchy, reckoned several economists.

They expect Q1 GDP growth to be in the range of 6-7 per cent, roughly in line with the 6.5 per cent uptick recorded in the same quarter of FY25, but slower than the 7.4 per cent growth for the preceding quarter estimated by the National Statistics Office (NSO). The NSO will release national income numbers for the quarter at the end of August.

Paras Jasrai, associate director, India Ratings says that early monsoon rains, while playing a dampener for industrial activity, particularly electricity and mining, bode well for agriculture. Data shows that kharif sowing has been nearly 10 per cent higher this year, following a good rabi harvest.

"Below normal temperatures during summers this year have crashed electricity demand. This is a direct result of the adverse climatic conditions. Growth in the manufacturing sector remained subdued during Q1 because of tariff wars and exports having fared badly after a good showing in April," said Jasrai.