GDP surges 7.8%, beats RBI forecast

India's economy grew at a faster-than-expected 7.8 per cent in the April-June quarter, according to Government data released on Monday, belying doubts about its robustness to face global economic uncertainty due to the Iran war and US President imposing tariffs and sanctions. The pace also exceeded the Reserve Bank of India's (RBI) forecast of 7 per cent for the quarter.

Prime Minister Modi hailed the growth and said, "Doomsayers were doomed and India bloomed yet again."

The Ministry of Statistics and Programme Implementation (MoSPI) estimated real Gross Domestic Product (GDP) at constant prices, at Rs 81.36 lakh crore in the first quarter of FY27. This compares with Rs 75.46 lakh crore in Q1 of FY26 and represents year-on-year growth of 7.8 per cent. Nominal GDP, which is calculated at current prices without adjusting for inflation, also recorded double-digit growth.

GDP growth in the first quarter of the 2026-27 fiscal year slowed from 8.6 per cent in the previous quarter, but remained well above expectations when the conflict erupted and disrupted energy markets.  Goods and services tax cuts and income tax reductions from earlier this year boosted consumer demand, with personal consumption rising 7.1 per cent against 6.8 per cent in the previous year, while private investment grew nearly 12 per cent from 5.8 per cent a year ago.

"The collective strength of our people ensured India delivered such growth despite oil price shocks and supply chain issues in the midst of global uncertainties.  "Doomsayers were doomed and India bloomed...yet again!" the PM posted on X.

"The credit for this strong performance goes to the people of India and their hard work. Reforms undertaken by the NDA Government, together with an agile management of the economy, are bearing results," she posted on social media. Sitharaman also said the Government remains committed to further expanding economic opportunities for all citizens.

Key primary sectors witnessed moderation during the first quarter. Agricultural growth slowed to 3.6 per cent YoY in the first quarter from 4.4 per cent a year earlier, while the mining sector registered a sharp drag, shrinking 2.4 per cent compared to a stellar 12.4 per cent growth in the corresponding period last fiscal. On the industrial front, manufacturing kept up its solid run, growing 9.2 per cent in Q1 compared to 8.3 per cent a year ago. The electricity sector saw a dramatic turnaround, jumping to 8.9 per cent growth after shrinking 1.8 per cent in the same period last year. Construction also picked up healthy steam, expanding 7.7 per cent against 5.2 per cent last fiscal, giving a solid boost to overall economic activity.

The Q1 GDP figures are provisional and could be revised.  The data will offer some relief to policymakers as they balance efforts to sustain growth with risks stemming from geopolitical tensions and volatile commodity markets.