NEW DELHI: Amid an uncertain global situation owing to ongoing regional wars, India’s economy expanded 7.8 per cent in the January-March quarter, exceeding forecasts on strong domestic demand and government expenditure.
The GDP growth compared with 7 per cent expansion a year back and 8 per cent in the previous quarter. Full-year growth accelerated to 7.7 per cent from 7.1 per cent in FY25, supported by healthy consumption and robust investment activity.
In a post on X, Prime Minister Narendra Modi stated, “India’s growth momentum remains strong! GDP growth rate of 7.7% in FY 2025-26 and 7.8% in Q4 of FY 2025-26 reflect the inherent strength of our economy, the success of reforms and the hard work of 140 crore Indians.”
The January-March period accounted for just one month of disruptions caused by the war in Iran. The spike in oil prices and the disruption in supplies from the Middle East — a key source for India’s crude oil, natural gas and LPG — will be fully visible in the current April-June quarter.
The Reserve Bank of India has already cut its 2026-27 (FY27) GDP growth forecast to 6.6 per cent from 6.9 per cent, citing elevated energy and commodity prices and persistent supply-chain disruptions linked to the conflict in West Asia.
Chief Economic Adviser V Anantha Nageswaran, addressing a press conference after the release of the data, said India could return to a growth rate of more than 7 per cent in FY28 if external conditions improve.
He said even if growth slows below 7 per cent in FY27, as projected by the RBI, policy measures aimed at preserving macroeconomic stability and ensuring adequate supplies could help the economy return to a growth trajectory above 7 per cent in FY28, provided external conditions improve.
However, on the contrary, Nageswaran further stressed the increased adverse global developments. The escalating conflict in West Asia has emerged as the single biggest risk to the country’s growth trajectory, threatening to fuel inflation, widen trade deficits and disrupt energy supplies, data shows.
Gross value added, which strips out the volatile components such as indirect taxes and government subsidies to present a more accurate measure of underlying economic activity, grew 7.9 per cent during the January-March quarter, the data released by MoSPI showed.
“Real GDP or GDP at constant prices is estimated to attain a level of Rs 323.12 lakh crore in the 2025-26, against the First Revised Estimate (FRE) of GDP for the year 2024-25 of Rs 299.89 lakh crore,” according to the data released by National Statistic Office (NSO).
The nominal GDP or GDP at current prices is estimated to attain a level of Rs 346.36 lakh crore in 2025-26, against Rs 318.07 lakh crore in 2024-25, showing a growth rate of 8.9 per cent.
This is the second set of GDP data in the new series with 2022-23 as the base year.
Commenting on the data, Finance Minister Nirmala Sitharaman said the government is committed to further drive the “reform express” with decisive policy measures to ensure positive economic momentum amidst the global challenges.
NSO further said GDP at constant prices in January-March quarter of 2025-26 is estimated at Rs 87.77 lakh crore, against Rs 81.40 lakh crore in the year-ago period, a growth of 7.8 per cent.
NSO said secondary and tertiary sectors have boosted the performance of the economy by registering growths of 8.8 per cent and 9.3 per cent, respectively, during FY26.
These sectors include construction, manufacturing, ‘trade, hotels, transport, communication and services related to broadcasting, storage’, and ‘financial, real estate, IT, professional services and ownership of dwelling’.
The primary sector registered 3.2 per cent growth rate mainly driven by the performance of agriculture and fishery sectors.
“Agriculture, livestock, forestry and fishing” segment grew at 3.6 per cent in the fourth quarter compared to 4.6 per cent. During 2025-26, the growth was 3.1 per cent.
On the expenditure side, both private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) registered over 7.5 per cent expansion during 2025-26.
The gross value added (GVA) has been estimated at Rs 294.91 lakh crore in 2025-26, against Rs 273.36 lakh crore in 2024-25, registering a growth rate of 7.9 per cent as against 7.3 per cent in the preceding year.
The GVA in the fourth quarter of FY26 was Rs 80.18 lakh crore against Rs 74.32 lakh crore in the year-ago period, registering a growth of 7.9 per cent.
As per data, in FY26, the manufacturing sector was the best-performing sector, registering growth of 10.7 per cent. The manufacturing sector registered growth at a higher rate than that of the services sector, which is influenced by government infrastructure spending, production incentives, and industrialisation.
The service sector, which represents the largest contribution to economic output, grew at 9.3 per cent, with growth coming from transport, finance and other digital economy activities. Growth in agriculture stood at 3 per cent, representing an improvement from last year’s growth.
Investments were especially positive. Gross Fixed Capital Formation – an indicator of investments, rose by 10.8 per cent in the last quarter of FY26, which is a much higher figure compared to GDP growth. In the same period, Private Final Consumption Expenditure, indicating household expenditure, increased by 7.1 per cent.
The government also highlighted that India faces a problem due to several factors associated with both supply and demand. Starting from the beginning of the conflict, the Indian oil basket rose by 40.5 per cent, while Brent Crude grew by 39.5 per cent.
Source: Millennium Post
