Why Economists Are Urging Caution Despite Strong GDP Growth in First Qtr

ALTHOUGH India's economy grew stronger-than-expected, at 7.8%, in the first quarter of FY26, economists caution the growth print looks brighter than the underlying reality—thanks largely to a sharp drop in the GDP deflator from 3.4% in the previous quarter to 1% in Q1 of FY26, the lowest in 6 years.

- DIPAK MONDAL @New Delhi

The GDP deflator, which adjusts nominal GDP for inflation, fell sharply as both wholesale price index (WPI) and consumer price index (CPI) inflation moderated in April-June. This pushed real GDP growth higher, even as nominal GDP growth slowed to 8.8% from 10.8% in the previous quarter.