GDP growth comes in at 7.8% in Q1, slower than last quarter but quicker than last year
The stronger performance in Q1 of this year as compared to last year has been driven by the manufacturing sector as well as some broad services categories such as utilities, financial services, real estate, IT, and public administration and defence.
India's Gross Domestic Product (GDP) grew by 7.8% in the April-June 2026 quarter (Q1 FY27), marking a slowdown compared to the 8.6% growth in the previous quarter but an improvement over the 6.9% increase in Q1 of 2025-26. The stronger performance in this year's Q1 was driven by the manufacturing sector and certain service categories including utilities, financial services, real estate, IT, and public administration and defense. Agriculture and mining, part of the primary sector, lagged significantly.
Prime Minister Narendra Modi hailed the 7.8% growth in Q1 of FY 2026-27 as an "exemplary feat," crediting the collective strength of the Indian people despite global uncertainties such as oil price shocks and supply chain issues. Finance Minister Nirmala Sitharaman echoed this sentiment, noting that nominal GDP growth was estimated at 10.3% for Q1 of FY 2026-27, while real Gross Value Added (GVA) growth was 8.2%.
The credit for this strong performance was attributed to the hard work of the Indian people and the reforms implemented by the NDA Government.
Chief Economic Adviser V. Anantha Nageswaran emphasized that the key takeaway from the data was the continued resilience of India's growth performance, supported by high-frequency indicators. However, some economists have cautioned that growth in upcoming months may slow due to factors such as a deficient southwest monsoon and unfavorable base effects.
The manufacturing sector showed impressive growth of 9.2% in Q1 of 2026-27, surpassing the 8.3% growth in Q1 of the previous year. This growth was largely driven by infrastructure-based companies in the construction sector, which increased to 7.7% in Q1 of 2026-27, up from 5.2% in the same period last year. The Electricity, Gas, Water Supply & Other Utility Services sector grew by 8.9% in Q1 of 2026-27, though some of this growth may be attributed to a low base effect following a contraction of 1.8% in Q1 of 2025-26.
In contrast, the tertiary sector, encompassing services, expanded by 10% in Q1 of 2026-27 compared to 8% in the same quarter of the previous year. Within this sector, the 'Financial, Real Estate, Ownership of dwelling, IT & Professional Services' category grew at 12.1% in Q1 of this year, compared to 8.8% in the previous year. However, the agriculture sector's growth slowed to 3.6% in Q1 of 2026-27 from 4.4% in Q1 of 2025-26, while the mining and quarrying sector contracted by 2.4%, partly due to a high base from its 12.4% growth in Q1 of 2025-26.
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