GDP growth comes in at 7.8% in Q1, slower than last quarter but quicker than last year

The stronger performance in Q1 of this year as compared to last year has been driven by the manufacturing sector as well as some broad services categories such as utilities, financial services, real estate, IT, and public administration and defence.

Updated - August 31, 2026 06:42 pm IST - NEW DELHI:

The mining and quarrying sector slipped into a contraction of 2.4%, in part due to a high base of 12.4% growth in Q1 of last year. | Photo Credit: Getty Images/iStockphotos

The growth in India’s Gross Domestic Product (GDP) stood at 7.8% in the April-June 2026 quarter (Q1 FY27), quicker than the 6.9% recorded in Q1 of last year, but slower than the 8.6% of the January-March 2026 quarter.

The stronger performance in Q1 of this year as compared to last year has been driven by the manufacturing sector as well as some broad services categories such as utilities, financial services, real estate, IT, and public administration and defence.

The primary sector, comprising agriculture and mining, lagged significantly.

“India’s exemplary GDP growth of 7.8% during Q1 of FY 2026-27 is a herculean feat,” Prime Minister Narendra Modi said in a post on X. “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.”

Finance Minister Nirmala Sitharaman also took to social media to point out that nominal GDP in Q1 of FY 2026-27 is estimated to have grown by 10.3%, while real Gross Value Added (GVA) growth came in at 8.2%.

“The credit for this strong performance goes to the people of India and their hard work,” she added in her post on X. “Reforms undertaken by the NDA Government, together with an agile management of the economy, are bearing results.”

Speaking at the press conference following the release of the data, Chief Economic Adviser V. Anantha Nageswaran said that the key message from the data was that “we are witnessing continued resilience in the Indian growth performance” and that this resilience is backed up by high-frequency indicators.

Some economists have, however, pointed out that while the Q1 growth was a positive surprise, growth in the months ahead is expected to slow.

“A deficient south-west monsoon, amid El Niño conditions, poses downside risks to agriculture and rural demand, while unfavourable base effects are likely to weigh on growth from Q2,” Vikram Chhabra, Senior Economist at financial services firm 360 ONE Asset said.

Secondary sector shows the way

The manufacturing sector grew by 9.2% in Q1 of 2026-27, a three-quarter high.

“Manufacturing growth has been very impressive at 9.2%, which comes over 8.3% [in Q1 last year],” Madan Sabnavis, chief economist at the Bank of Baroda explained. “Here it is again the infra-based companies which have contributed to growth based on the results of companies for Q1.”

Overall, Mr. Sabnavis said that the data showed that growth has been spearheaded by capital formation, as measured by the Gross Fixed Capital Formation (GFCF), which has increased to 34.3% of GDP in nominal terms from 31.4% last year, and grew 20.4% in Q1 of this year.

“This is a major takeaway as this involves both private and government expenditure with the former being driven by data centres and power, besides metals,” he added.

Broad-based growth elsewhere

The construction sector grew 7.7% in Q1 of 2026-27 compared to 5.2% in Q1 of last year.

The third broad category of the secondary sector — Electricity, Gas, Water Supply & Other Utility Services — saw growth coming in at 8.9% in Q1 of 2026-27, although some of this is likely a low base effect since the sector had contracted 1.8% in Q1 of 2025-26.

The tertiary sector, comprising services, cumulatively grew 10% in Q1 of 2026-27 as compared to 8% in the same quarter of the previous year. Within this, the ‘Financial, Real Estate, Ownership of dwelling, IT & Professional Services’ category grew at 12.1% in Q1 of this year as compared to 8.8% of last year.

The agriculture sector, however, saw growth slowing to 3.6% in Q1 of 2026-27 from 4.4% in Q1 of 2025-26. The mining and quarrying sector slipped into a contraction of 2.4%, in part due to a high base of 12.4% growth in Q1 of last year.

Published - August 31, 2026 06:28 pm IST

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