India’s economy has delivered a strong performance in the first quarter of the fiscal year 2025-26, with real GDP growth accelerating to 7.8% in the April–June period. The data, released by the National Statistical Office (NSO) on 29th August 2025, has surprised many who had projected growth in the range of 6.5%–6.8%. The figure also marks a five-quarter high, underlining India’s position as the fastest-growing major economy despite global uncertainties, including rising U.S. tariffs, volatile commodity prices, and geopolitical tensions.
GDP Data at a Glance
According to the NSO release, real GDP at constant prices stood at ₹47.89 lakh crore in Q1 FY26, compared to ₹44.42 lakh crore in the same period last year, representing a 7.8% year-on-year expansion. In nominal terms, GDP rose to ₹86.05 lakh crore, reflecting 8.8% growth, aided by robust government spending, strong domestic demand, and a strong services sector.
India’s GDP growth in Q1 FY25 was 6.5%. The latest numbers clearly indicate that the economy has regained momentum after a period of moderated expansion, and is well on track to maintain growth at a level that outpaces other major economies.
Sectoral Highlights
1. Agriculture and Allied Activities
Agriculture registered a 3.7% growth in gross value added (GVA), a sharp improvement from 1.5% in the year-ago quarter. Favorable weather conditions and better rabi output supported the sector. However, warn that any irregularities in monsoon distribution during the kharif season could weigh on subsequent quarters.
2. Industry (Secondary Sector)
The industrial sector delivered a mixed performance:
- Manufacturing grew strongly by 7%, reflecting recovery in domestic demand and supply chain normalization.
- Construction rose by 6%, supported by higher infrastructure spending and steady demand in the real estate sector.
- Mining and quarrying contracted by 1%, primarily due to weaker exports and reduced global commodity demand.
- Electricity, gas, water supply, and utilities showed muted growth of 5%, pointing towards temporary constraints in energy production.
3. Services (Tertiary Sector)
The standout performer was the services sector, which clocked an impressive 9.3% growth, up from 6.8% in Q1 FY25. Sub-segments such as financial services, IT-enabled services, trade, transport, and hospitality all recorded significant gains. The rapid expansion of digital platforms and higher consumption of discretionary services boosted this segment, making it the largest contributor to overall GDP growth.
Expenditure Breakdown
On the expenditure side, the composition of GDP reflects broad-based growth:
- Private Final Consumption Expenditure (PFCE) grew by 0% in real terms. Although slightly lower than last year’s 8.3%, household consumption remained resilient, driven by urban demand, recovery in rural consumption, and festive season stocking.
- Government Final Consumption Expenditure (GFCE) surged by 7%, compared to just 4.0% in Q1 FY25. Increased capital expenditure on infrastructure and welfare schemes played a crucial role in propping up demand.
- Gross Fixed Capital Formation (GFCF), a measure of investment, rose by 8%, up from 6.7% in the previous year. This indicates improved investor confidence and continued momentum in both private and public investment.
The share of exports in GDP, however, showed signs of weakness due to rising U.S. tariffs and slowing global demand, while imports remained higher. This is expected to put some pressure on India’s current account balance in the coming quarters.
Growth Outlook
Despite near-term challenges, the outlook for FY26 remains broadly positive. The government has projected GDP growth in the range of 6.3% to 6.8% for the full year, supported by robust domestic demand, infrastructure spending, and continued expansion in services.
Summary Table of Key Indicators
| Indicator | Q1 FY26 | Q1 FY25 | Trend |
| Real GDP Growth | 7.8% | 6.5% | Accelerating |
| Nominal GDP Growth | 8.8% | 6.2% | Rising |
| Agriculture GVA | 3.7% | 1.5% | Improved |
| Manufacturing | 7.7% | 6.0% | Strong |
| Construction | 7.6% | 6.4% | Robust |
| Mining & Utilities | −3.1% / +0.5% | -0.8% | Weak |
| Services Growth (Tertiary) | 9.3% | 6.8% | Very Strong |
| GFCE (Govt Consumption) | +9.7% | +4.0% | Higher |
| PFCE (Private Consumption) | +7.0% | +8.3% | Slightly Lower |
| GFCF (Investment) | +7.8% | +6.7% | Higher |
Conclusion
The release of Q1 FY26 GDP data underscores the resilience of the Indian economy in the face of global turmoil. With growth accelerating to 7.8%, India has once again established itself as the standout performer among major economies. Strong performances in manufacturing, construction, and services have offset weaknesses in mining and exports, while government spending has played a crucial counter-cyclical role.