Outpacing expectations by most forecasters, India’s economy grew at a robust 7.8 per cent in the June quarter of FY27, compared with 8.6 per cent in the preceding March quarter of FY26, despite geopolitical headwinds arising from the West Asia crisis, according to data released by the National Statistical Office on Monday.
Powered by strong manufacturing and services sector growth, India remained one of the fastest growing major economies, with China expanding 4.3 per cent and Indonesia growing 5.3 per cent in the June quarter.
India’s economy had grown 6.9 per cent in the June quarter of last financial year.
The gross value added (GVA) growth print at 8.2 per cent for Q1 was higher than real gross domestic product (GDP) growth, signalling subsidies outstripped indirect taxes during the quarter.
Nominal GDP grew at 10.3 per cent in the June quarter against 9.1 per cent in the preceding March quarter of FY26, indicating towards built up in inflationary pressure.
Forecasts by agencies for June quarter GDP growth had ranged between 6.9 per cent by India Ratings & Research (Ind-Ra) and 8 per cent by the State Bank of India (SBI). The Reserve Bank of India had estimated growth at 7 per cent for the same quarter.
For example, the Q4 FY26 GDP growth was revised upward to 8.6 per cent from the earlier estimate of 7.8 per cent. This led overall GDP growth of FY26 to 7.8 per cent from 7.7 per cent estimated earlier.
Prime Minister Narendra Modi said India’s exemplary GDP growth during Q1 of FY27 is a herculean feat. “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!,” he posted on X.
Finance minister Nirmala Sitharaman said 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. The NDA government, led by @narendramodi, remains committed to further expanding economic opportunities for all our citizens,” she added.
Sectoral data pointed towards pick up in investment demand (11.9 per cent) in the June quarter while private spending (7.1 per cent) and government spending (4.3 per cent) decelerated compared to the preceding March quarter.
Supply side measures showed acceleration in manufacturing output (9.2 per cent) in the June quarter while marginal slowdown in farm output growth (3.6 per cent), possibly due to delayed onset of monsoon. While services activity marginally slowed down in the June quarter, it grew in double digits (10 per cent) for the third consecutive quarter, led by the financial, real estate and IT sector (12.1 per cent).
Rumki Majumdar, economist, Deloitte India said the broad-based strength across manufacturing and services suggests that businesses were scaling up activity in anticipation of stronger demand, including the pent-up spending deferred amid first-quarter uncertainty and the seasonal boost from the approaching festive period.
Combined exports of goods and services grew at a robust pace of 12 per cent in real terms in June quarter while imports contracted 1.1 per cent, signalling resilience of the external sector despite global headwinds.
SBI Capital Markets in a research report said strong growth and hardening inflation indicating towards a policy rate increase in FY27.
“Inflation prints are ambling northwards with the RBI’s own projections putting both headline and Core CPI above target. Real rates close to 0 per cent, and the minutes of the last MPC showed members were looking at rate hike scenarios. Further, members of the US Fed have coagulated around the theme of possible hikes, and oil prices show few signs of cooling. All these put together are making the case for a policy rate hike in FY27 stronger than before,” it added.
Rajani Sinha, Chief Economist at CareEdge Ratings said she expects some growth moderation in the coming quarters. “The looming global risks from geopolitical tensions and trade policy uncertainty are expected to weigh on the growth outlook. On the domestic front, weather-related uncertainties stemming from the El Niño conditions pose a threat for agricultural output and yields,” she added.
