India’s Q1 FY26 GDP Grows 7.8%, Five-Quarter High, Beats RBI Forecast

India’s gross domestic product (GDP) grew 7.8 per cent in the first quarter of FY2025-26 (April–June), marking a five-quarter high, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday.

In comparison, the GDP growth rate during the same quarter last year was 6.5 per cent.

The latest figures have outpaced the Reserve Bank of India’s (RBI) projection of 6.5 per cent for Q1 FY26. Earlier this month, during its monetary policy committee (MPC) meeting, the central bank had maintained its growth forecast for both the first quarter and the full financial year at 6.5 per cent.

Nominal GDP rose 8.8 per cent to ₹86.05 trillion in the June quarter. Real Gross Value Added (GVA) at constant prices, reflecting the actual value of goods and services produced, grew 7.6 per cent to ₹44.64 trillion, while nominal GVA registered an 8.8 per cent increase to ₹78.25 trillion.

GDP Growth by Sector

India’s Q1 FY26 economic growth was driven by the services sector, which expanded 9.3 per cent, compared to 6.8 per cent in the same quarter last year.

The manufacturing sector grew 7.7 per cent, while construction recorded a 7.6 per cent expansion.

Agriculture grew 3.7 per cent in Q1 FY26, compared to 1.5 per cent in the same period last year, while mining contracted by 3.1 per cent and utilities recorded a modest growth of 0.5 per cent.

Expenditure Components Growth

Real Private Final Consumption Expenditure (PFCE) grew 7 per cent in Q1 FY26, lower than the 8.3 per cent recorded a year earlier. PFCE reflects household and non-profit institutional spending on goods and services.

Government Final Consumption Expenditure (GFCE) rose 9.7 per cent in nominal terms during the quarter, up from 4 per cent in Q1 FY25. GFCE captures government spending on goods and services to meet the collective needs of society.

Gross Fixed Capital Formation (GFCF) grew 7.8 per cent at constant prices in Q1 FY26, compared to 6.7 per cent in the same quarter last year. GFCF reflects the economy’s investment in long-term assets such as infrastructure, machinery, and buildings.

Robust Economic Growth in Q4 FY25

India’s Q1 GDP growth builds on the momentum from the previous quarter, when the economy expanded 7.4 per cent in the March quarter, surpassing market expectations of 6.7 per cent. The rebound was supported by stronger economic activity, aided by easing food and energy prices, lower benchmark interest rates, and rising investment. India’s limited reliance on exports also helped shield it from global tariff risks.

RBI’s Growth Forecast for the Quarter

The RBI has maintained its real GDP growth forecast for FY26 at 6.5 per cent, supported by steady domestic demand, ongoing government capital spending, and signs of a pickup in rural consumption.

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