India’s GDP Surges 7.8% in Q1 FY26, Outpacing Estimates

India’s economy opened the financial year 2025-26 with a robust 7.8% growth in the first quarter, surpassing expectations despite global challenges, including the 50% tariff imposed by the United States. The growth marks a notable increase from the 6.5% recorded in the same period last year.

The services sector led the expansion, driving overall Gross Value Added (GVA) growth to 7.6% during April-June 2025.

According to the Ministry of Statistics and Programme Implementation (MoSPI), Real GDP at constant prices reached Rs 47.89 lakh crore in Q1 FY26, up from Rs 44.42 lakh crore a year earlier. Nominal GDP at current prices rose to Rs 86.05 lakh crore from Rs 79.08 lakh crore, reflecting an 8.8% increase.

Real GVA, which excludes product taxes and subsidies, grew to Rs 44.64 lakh crore compared with Rs 41.47 lakh crore in Q1 FY25, while nominal GVA rose to Rs 78.25 lakh crore from Rs 71.95 lakh crore, recording a similar 8.8% gain.

In the sectoral breakdown, agriculture and allied activities expanded by 3.7% in real terms, a significant improvement over 1.5% last year. The secondary sector showed mixed results: manufacturing grew 7.7%, construction 7.6%, while mining and quarrying contracted 3.1%, and electricity, gas, water supply, and utilities rose only 0.5%.

The tertiary or services sector demonstrated the strongest growth, surging 9.3% in Q1 FY26, compared to 6.8% in the corresponding period last year.

On the expenditure front, Government Final Consumption Expenditure (GFCE) recovered strongly, growing 9.7% in nominal terms versus 4.0% in Q1 FY25. Private Final Consumption Expenditure (PFCE), a measure of household spending, rose 7.0% in real terms, slightly below last year’s 8.3% growth. Gross Fixed Capital Formation (GFCF), reflecting investment in the economy, increased 7.8% at constant prices, up from 6.7% in Q1 FY25.

The data indicates that India has begun FY26 on a strong footing, with GDP growth surpassing estimates and signaling resilience amid global economic headwinds.