India's Q1 FY26 GDP hits five-quarter high at 7.8%, beats RBI forecast

Q1 FY26 GDP: MoSPI data shows GDP growth above RBI's 6.5% estimate; nominal GDP at ₹86.05 trillion, GVA at ₹44.64 trillion

India’s gross domestic product (GDP) grew 7.8 per cent in the first quarter (April-June) of the financial year 2025-26 (FY26), hitting a five-quarter high, according to estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday.

 

During the same period last year, the GDP growth rate stood at 6.5 per cent.

 

The latest estimates are above the Reserve Bank of India’s (RBI’s) projection of 6.5 per cent for Q1 FY26. In its most recent monetary policy committee (MPC) meeting earlier this month, the central bank had retained its growth forecast for the first quarter and the full financial year at 6.5 per cent.

 

 

Nominal GDP increased 8.8 per cent to ₹86.05 trillion during the June quarter. Real Gross Value Added (GVA) at constant prices, which measures the value of goods and services produced, increased 7.6 per cent to ₹44.64 trillion, while nominal GVA expanded 8.8 per cent to ₹78.25 trillion.

Sector-wise GDP growth

India’s economic growth during Q1 FY26 was led by services, which grew 9.3 per cent, up from 6.8 per cent during the same period last year.

 

Both manufacturing and construction also expanded at 7.7 per cent and 7.6 per cent, respectively. 

 

Meanwhile, agriculture grew 3.7 per cent, compared to 1.5 per cent growth registered in Q1 FY25. Mining (-3.1 per cent) contracted, and utilities saw muted growth at 0.5 per cent.

Growth in expenditure components

Real Private Final Consumption Expenditure (PFCE) reported a 7 per cent growth during Q1 FY26, against 8.3 per cent last year. PFCE measures spending by resident households and non-profit institutions serving households on goods and services.

 

Government Final Consumption Expenditure (GFCE) grew 9.7 per cent in nominal terms during the same period, compared to 4 per cent in Q1 FY25. GFCE represents a government's spending on goods and services to directly satisfy the collective needs of the community.

 

Gross Fixed Capital Formation (GFCF) recorded a 7.8 per cent growth rate at constant prices, against 6.7 per cent last year. GFCF shows the total value of an economy's investment in long-term, durable assets, such as machinery, infrastructure, and buildings.

Q4FY25 sees strong economic growth

India's Q1 GDP growth adds to the momentum from the previous quarter, when GDP expanded 7.4 per cent in the March quarter, above market expectations of 6.7 per cent. The rebound reflected traction in economic activity, driven by easing food and energy prices, lower benchmark interest rates, and5 rising investment. India’s relatively low dependence on exports also insulated it from global tariff threats.

RBI's quarterly growth forecast

The RBI had retained its real GDP growth forecast for FY26 at 6.5 per cent, underpinned by resilient domestic demand, continued government capital expenditure, and signs of improving rural consumption.