India’s GDP growth in Q1 reached 7.8%, slower than last quarter but faster than last year

India’s gross domestic product (GDP) growth was 7.8% in the April-June 2026 quarter (Q1 FY27), faster than the 6.9% recorded in the first quarter of last year, but slower than the 8.6% in the January-March 2026 quarter.

Stronger performance in Q1 this year compared to last year was driven by the manufacturing sector as well as some broad service categories such as utilities, financial services, real estate, IT and public administration and defence.

The primary sector, including agriculture and mining, lagged significantly behind.

“India’s exemplary GDP growth of 7.8% during the 1st quarter of FY 2026-27 is a Herculean feat,” said Prime Minister Narendra Modi in a post on X. “The collective strength of our people ensured that India achieved such growth despite oil price shocks and supply chain challenges amid global uncertainty.”

Finance Minister Nirmala Sitharaman also pointed out on social media that nominal GDP in Q1 FY2026-27 is estimated to have grown by 10.3%, while real gross value added (GVA) growth was 8.2%.

“The credit for this strong performance goes to the people of India and their hard work,” she added in her post on X. “The reforms implemented by the NDA government along with agile management of the economy are delivering results.”

Chief Economic Adviser V. Anantha Nageswaran told a news conference after the data release that the key message from the data was that “we are witnessing continued resilience in India’s growth” and that this resilience is supported by high-frequency indicators.

However, some economists pointed out that while growth in Q1 was a positive surprise, growth is expected to slow in the coming months.

“A deficient southwest monsoon amid El Niño conditions poses downside risks to agriculture and rural demand, while adverse base effects are likely to weigh on growth from Q2,” said Vikram Chhabra, chief economist at financial services firm 360 ONE Asset.

The secondary sector shows the way

The manufacturing sector grew by 9.2% in the first quarter of 2026-27, a three-quarter high.

“Manufacturing growth was very impressive at 9.2%, up from 8.3% (in the first quarter of last year),” explained Madan Sabnavis, chief economist at Bank of Baroda. “It’s again the infrastructure-based companies that contributed to the growth based on the companies’ Q1 results.”

Overall, Mr Sabnavis said the data showed growth was led by capital formation, as measured by gross fixed capital formation (GFCF), which rose to 34.3% of GDP in nominal terms from 31.4% last year and rose 20.4% in the first quarter of this year.

“This is a major benefit as it includes both private and government spending, with the former driven by data centers and energy, in addition to metals,” he added.

Broad growth elsewhere

The construction sector grew by 7.7% in the first quarter of 2026-27 compared to 5.2% in the first quarter of last year.

The third broad category of the secondary sector – electricity, gas, water and other engineering services – grew by 8.9% in the first quarter of 2026-27, although some of this is likely to be a low base effect as the sector fell by 1.8% in the first quarter of 2025-26.

The tertiary sector, which includes services, grew by 10% cumulatively in the first quarter of 2026-27 compared to 8% in the same quarter of the previous year. Within that, the “Finance, Real Estate, Home Ownership, IT & Professional Services” category grew 12.1% in the first quarter of this year, compared to 8.8% last year.

However, the agriculture sector saw growth decelerate to 3.6% in Q1 2026-27 from 4.4% in Q1 2025-26. The mining and quarrying sector slipped 2.4%, partly due to a strong base of growth of 12.4% in Q1 last year.

Published – 31 Aug 2026 18:28 IST