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

India’s gross domestic product (GDP) grew 7.8% in Q1 (April-June) of FY26, marking a five-quarter high, according to the Ministry of Statistics and Programme Implementation (MoSPI). The growth rate exceeded the Reserve Bank of India’s (RBI) projection of 6.5% for the quarter and FY26. Nominal GDP increased by 8.8% to Rs. 86,05,000 crore (US$ 975.7 billion), while real Gross Value Added (GVA) at constant prices expanded 7.6% to Rs. 44,64,000 crore (US$ 506.2 billion). Sector-wise, services led growth at 9.3%, followed by manufacturing at 7.7% and construction at 7.6%. Agriculture grew 3.7%, up from 1.5% in Q1 FY25, while mining contracted 3.1% and utilities saw modest growth of 0.5%.
Expenditure components showed sustained momentum, with real Private Final Consumption Expenditure (PFCE) rising 7% and nominal Government Final Consumption Expenditure (GFCE) up 9.7%. Gross Fixed Capital Formation (GFCF) recorded 7.8% growth at constant prices, reflecting strong investment in infrastructure, machinery, and buildings. The robust Q1 growth follows a 7.4% expansion in Q4 FY25, driven by easing food and energy prices, lower interest rates, and rising investment. India’s relatively low export dependence shielded the economy from global tariff pressures. The RBI expects FY26 growth to remain resilient at 6.5%, supported by domestic demand, government capital expenditure, and improving rural consumption.

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