India’s economy expanded by an unexpected 7.8 percent in the April-June quarter, marking its highest growth rate in five quarters, ahead of potential impacts from U.S. tariffs affecting key exports such as textiles. This growth in the first quarter of the current fiscal year was predominantly fueled by the agricultural sector and supported by services including trade, hospitality, finance, and real estate, according to the latest government data released on Friday. The previous peak growth was recorded at 8.4 percent in January-March 2024. India continues to be the fastest-growing major economy, outpacing China’s 5.2 percent growth in the same period.
Agriculture saw a growth of 3.7 percent, a significant increase from 1.5 percent in the April-June quarter of 2024-25, as reported by the National Statistics Office (NSO). Meanwhile, the manufacturing sector experienced a slight increase in growth to 7.7 percent for the first quarter of FY26, compared to 7.6 percent in the same period last year. Earlier this month, the Reserve Bank of India projected a real GDP growth rate of 6.5 percent for 2025-26, with estimates of 6.5 percent in Q1, 6.7 percent in Q2, 6.6 percent in Q3, and 6.3 percent in Q4.
According to the NSO, the real GDP at Constant Prices for Q1 of FY 2025-26 is estimated at Rs 47.89 lakh crore, up from Rs 44.42 lakh crore in Q1 of FY 2024-25, reflecting a growth rate of 7.8 percent. The nominal GDP at Current Prices for Q1 of FY 2025-26 is projected at Rs 86.05 lakh crore, compared to Rs 79.08 lakh crore in Q1 of FY 2024-25, indicating a growth rate of 8.8 percent. However, the mining and quarrying sector saw a decline of 3.1 percent, and the utility services sector experienced a modest growth of 0.5 percent during Q1 of FY 2025-26.
The tertiary sector grew significantly by 9.3 percent at Constant Prices in Q1 of FY 2025-26, compared to a growth rate of 6.8 percent in Q1 of FY 2024-25. This sector includes services such as trade, hospitality, transport, finance, real estate, professional services, public administration, and defense. The NSO also noted that Government Final Consumption Expenditure (GFCE) rebounded with a nominal growth rate of 9.7 percent during Q1 of FY 2025-26, compared to a 4.0 percent growth in Q1 of FY 2024-25. Real Private Final Consumption Expenditure (PFCE) grew by 7.0 percent in the reporting quarter, down from 8.3 percent in the same period of the previous financial year.
Gross Fixed Capital Formation (GFCF) recorded a growth rate of 7.8 percent at Constant Prices, compared to 6.7 percent in Q1 of FY25. Additionally, discrepancies in GDP estimation methods rose to Rs 1.11 lakh crore in the first quarter of this fiscal year, up from Rs 33,384 crore in the same period last year.