Q1 GDP growth hits surprise five-quarter high of 7.8%

Buoyed by continued lower inflation, the Indian economy clocked 7.8% gross domestic product (GDP) growth in the first quarter of fiscal year 2026 (FY26), a five-quarter high.

- 

The number defied expectations of a slowdown and beat the 6.7% projection by economists in a Mint poll and the 6.5% projected by the Reserve Bank of India (RBI).

The latest print is higher even than the 7.4% recorded in the previous quarter, data released by the statistics ministry on Friday showed. While a large part of that could be attributed to continued lower inflation in the country, the surprisingly high GDP growth dampens the immediate prospect of any further cuts in the policy rate by the RBI.

However, some economists expressed concern over a fall in nominal GDP growthbefore adjusting for inflationwhich slid to a three-quarter low of 8.8% in Ql.

Nonetheless, even as low inflation helped push the real GDP growth number up, some segments of the economy showed upward momentum in both real and nominal terms.

Manufacturing gross value added (GVA) growth in real terms increased to 7.7% in April-June from 4.8% the previous quarter. In nominal terms, the sector improved its growth to 10.1% from 7.8%.

Similarly, growth in the services sector rose to 9.3% from 7.3% in real terms and to 11.3% from 10.8% in nominal terms.