India beats the odds, delivers 7.7% FY26 growth, 7.8% in Q4

FY27 growth forecast cut to 6.6% due to higher energy prices, commodity costs supply-chain disruptions

- SIMONTINI BHATTACHARJEE

Amid an uncertain global situation owing to ongoing regional wars, India’s economy expanded 7.8 per cent in the January-March quarter, exceeding forecasts on strong domestic demand and government expenditure.

The GDP growth compared with 7 per cent expansion a year back and 8 per cent in the previous quarter. Full-year growth accelerated to 7.7 per cent from 7.1 per cent in FY25, supported by healthy consumption and robust investment activity.

In a post on X, Prime Minister Narendra Modi stated, “India’s growth momentum remains strong! GDP growth rate of 7.7% in FY 2025-26 and 7.8% in Q4 of 2025-26 reflect the inherent strength of our economy, the success of reforms and the hard work of 140 crore Indians.”

The January-March period accounted for just one month of disruptions caused by the war in Iran. The spike in oil prices and the disruption in supplies from the Middle East — a key source for India’s crude oil, natural gas and LPG — will be fully visible in the current April-June quarter.

The Reserve Bank of India has already cut its 2026-27 (FY27) GDP growth forecast to 6.6 per cent from 6.9 per cent, citing elevated energy and commodity prices and persistent supply-chain disruptions linked to the conflict in West Asia.

Chief Economic Adviser V Anantha Nageswaran, addressing a press conference after the release of the data, said India could return to a growth rate of more than 7 per cent in FY28 if external conditions improve.