Datanomics: India's GDP surprise driven by deflator effect across sectors

The sharp uptick was largely due to the impact of GDP deflators, which remained unusually soft, particularly in the primary and secondary sectors

India’s economy grew faster than expected in the first quarter of 2025-26 (Q1FY26), with real gross domestic product (GDP) expanding by 7.8 per cent year-on-year from 7.4 per cent  in the previous quarter. The uptick was largely due to the impact of the GDP deflator, which remained unusually soft, particularly in the primary and secondary sectors. Deflator, which measures average change in prices, is used to convert nominal GDP into real GDP. While nominal growth eased to a three-quarter low of 8.8 per cent, a smaller gap between nominal and real growth rates pushed the real GDP print higher than