NEW DELHI:
India’s economy grew 7.8% year-on-year in the April-June quarter of 2026,
comfortably exceeding economists’ expectations and the Reserve Bank of India’s
forecast, as a sharp rise in investment, stronger manufacturing activity and
resilient consumer demand supported growth in the opening quarter of the
financial year.
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Call: +91 9871764812Government data released on Monday showed that gross domestic product growth in the first quarter of the 2026-27 financial year was significantly higher than the 7.1% expansion expected by economists in a Reuters poll. The RBI had projected growth of 7% for the quarter.
The latest figure, however, was lower than the revised 8.6% growth recorded in the previous three months. Despite the sequential moderation, the data point to continued strength in domestic economic activity and suggest that India began the new financial year on a stronger footing than anticipated.
Investment was among the biggest drivers of the expansion. Private investment increased by nearly 12% during the quarter, compared with growth of 5.8% a year earlier. The sharp acceleration indicates stronger capital formation and points to continued business activity despite uncertainty in the global economy.
Manufacturing also provided significant support to the economy. Output in the sector expanded 9.2% in the April-June quarter, faster than the 8.3% growth recorded in the corresponding period a year earlier. The performance indicates that industrial activity remained robust even as businesses faced a challenging external environment.
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Call: +91 9871764812Consumer demand remained another important pillar of growth. Personal consumption expenditure rose 7.1% in the first quarter, compared with 6.8% a year earlier. Economists attributed part of the resilience in demand to tax measures introduced earlier in the year, including reductions in goods and services taxes and income-tax cuts.
The stronger consumption figures suggest that households continued to contribute to economic expansion even amid concerns about higher prices and global uncertainty. Domestic demand has remained one of the key strengths of the Indian economy, providing a buffer against weaker conditions in some external markets.
Prime Minister Narendra Modi welcomed the GDP figures, describing the 7.8% growth as a “herculean feat” in a post on X. He said the performance reflected the strength of the Indian economy despite oil-price shocks, supply-chain disruptions and broader global uncertainties.
The latest figures also showed that gross value added, which excludes some volatile components of national accounts such as indirect taxes and subsidies, increased 8.2% in the April-June quarter. The measure is closely watched by economists because it is considered a useful indicator of underlying economic activity.
The financial services sector was another major contributor. It grew 12.1% during the quarter, accelerating from 8.8% in the same period a year earlier. Strong bank credit growth supported the sector, with overall loan growth reaching 18.3% at the end of June, the highest rate in more than a decade, according to data cited by Reuters from the RBI’s August bulletin.
The strong credit expansion indicates that financing conditions and demand for loans remained supportive of economic activity across agriculture, industry and services. Increased borrowing can help businesses finance investment while also supporting household and commercial activity.
The growth performance is particularly notable because it came against a difficult global backdrop. Geopolitical tensions and the US-Iran conflict have contributed to volatility in energy markets and raised concerns over India’s dependence on imported crude oil.
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