The agriculture sector recorded a 3.7 per cent growth, up from 1.5 per cent in the April-June period of 2024-25, as per the National Statistical Office (NSO) data released on Friday.
New Delhi: Surpassing the expectations of analysts and economists, the Indian economy grew surprisingly by 7.8 per cent in April-June, the highest in five quarters despite the likely disruptive import tariffs imposed by US President Donald Trump. The government in a statement attributed it to the good showing by the farm sector and services like trade, hotel, financial and real estate among others.
The previous highest pace of growth in the country's GDP was recorded at 8.4 per cent during January-March 2024.
India remains the fastest-growing major economy, as China’s GDP growth in the April-June period was 5.2 per cent, while the United States grew at 3.3 per cent in the three months to June 30.
Economists and analysts had projected that India’s GDP growth rate would ease to 6.5-6.7 per cent in Q1. Earlier this month, the central bank had forecast the real GDP growth rate for 2025-26 at 6.5 per cent, with 6.5 per cent in Q1, 6.7 per cent in Q2, 6.6 per cent in Q3, and 6.3 per cent in Q4.
Commenting on the GDP data, chief economic adviser (CEA) Anantha Nageswaran said, “Indian economy will grow 6.3-6.8 pc in FY26 despite tariff challenges and very happy to share that the country’s GDP grew by 7.8 per cent in Q1. I think the impact of high US tariffs will be short-lived. Overall mix of GDP growth shows a fairly well distributed growth composition. Compared to several other countries, India’s numbers are significantly higher.”
“However, the services sector remains fairly robust with strong PMI readings. But there is some uncertainty for the period for which the additional tariffs will last; hopeful of a solution that could be sorted out sooner than later. However, I am not expecting significant downside risks to GDP growth due to high US tariffs,” Nageswaran added.
As per National Statistics Office (NSO), real GDP or GDP at constant prices in Q1 of FY 2025-26 is estimated at `47.89 lakh crore, against `44.42 lakh crore in Q1 of FY 2024-25, registering a growth rate of 7.8 per cent. “Nominal GDP or GDP at current prices in Q1 of FY 2025-26 is estimated at `86.05 lakh crore, against `79.08 lakh crore in Q1 of FY 2024-25, showing a growth rate of 8.8 per cent,” the data showed.
The NSO data further showed that the agriculture sector recorded a 3.7 per cent growth, up from 1.5 per cent in the April-June period of 2024-25. “However, manufacturing sector growth increased marginally at 7.7 per cent in the first quarter of FY26 compared to 7.6 per cent recorded in the year-ago period,” the data showed.
The data also stated that mining & quarrying (-3.1 per cent) and electricity, gas, water supply and other utility services sector (0.5 per cent) has seen a moderated real growth rate during Q1 of FY 2025-26. “Tertiary sector has recorded a substantial growth rate of 9.3 per cent at Constant Prices in Q1 of FY 2025-26, over the growth rate of 6.8 per cent in Q1 of FY 2024-25. Tertiary sector includes services like trade, hotel, transport, financial institutions, real estate, professional services, public administration and defence,” it showed.
Aditi Nayar, chief economist, head, research & outreach, ICRA, stated that after the unexpectedly strong Q1 FY2026, a lower YoY (year on year) momentum of government capex and the looming hit to exports from the US tariff and penalties, would dampen growth prints in the coming quarters, notwithstanding the balm offered by GST rationalisation.
“Amidst continuing uncertainty, we maintain our baseline GDP growth forecast at 6.0 per cent for FY2026. The sharper than expected GDP growth print, which represents an acceleration over the previous quarter, has doused any expectations that the tariff related turmoil could prompt monetary easing in the October 2025 policy review,” she added.
