7.8% GDP growth for Q1 FY26 is testament to Indian economy's resilience, will boost sentiment: Industry chambers

New Delhi [India], August 29 (ANI): Industry chambers on Friday said that GDP growth of 7.8% for Q1 FY26 is a testament to the Indian economy's resilience, signals strong momentum at the start of the fiscal year and will help boost business sentiments when the country is facing global headwinds.
India's real GDP is estimated to have grown by 7.8 per cent in the April-June quarter of the financial year 2025-26, surpassing the 6.5 per cent growth rate in the same quarter of the previous fiscal, according to official data released on Friday.
The National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), released the Quarterly Estimates of Gross Domestic Product (GDP) for the April-June Quarter of financial year 2025-26.
India's nominal GDP grew at an 8.8 per cent rate during the April-June quarter.
The Agriculture and Allied Sector has observed the Real GVA (gross value addition) growth rate of 3.7 per cent, as compared to the growth rate of 1.5 per cent registered in Q1 of the last financial year.
Secondary Sectors, prominently Manufacturing (7.7 per cent) and Construction (7.6 per cent) sector have registered above 7.5 per cent growth rate at Constant Prices in this quarter.
Mining and Quarrying (-3.1 per cent) and Electricity, Gas, Water Supply and Other Utility Services Sector (0.5 per cent) have seen a moderated real growth rate during Q1 of 2025-26.
In 2024-25, the Indian economy grew by 6.5 per cent in real terms. The Reserve Bank of India had projected 6.5 per cent GDP growth for the fiscal year 2024-25.
Reacting to the growth figures, ASSOCHAM President Sanjay Nayar said India's real GDP surged by a robust 7.8 per cent in Q1 of FY 2025-26, well above the 6.5 per cent recorded a year earlier, signalling strong momentum at the very start of the fiscal year.
"The services sector added further strength with 7.6% real GVA growth, reflecting deepening dynamism across key areas. This encouraging performance underscores India's resilience and adaptability, reaffirming its vibrant growth trajectory and ensuring the nation will confidently sail through prevailing global headwinds," he said.
Jyoti Vij, Director General, FICCI, said the GDP growth of 7.8% for Q1 FY26 is a testament to Indian economy's resilience.
"The strong growth has come at a juncture when the country is facing significant global headwinds and will help boost business sentiment. Indian industry will be able to navigate the near-term external challenges on the back of strong domestic demand, opening up of new market opportunities through our recent trade agreements as well as various policy measures, particularly the upcoming rationalisation of GST rates," she said.
PHDCCI President Hemant Jain said the growth was largely driven by an increase in the tertiary sector followed by manufacturing and agriculture sectors.
"In Q1 FY 2025-26, India's economy grew at 7.8% over the growth rate of 6.5% during Q1 FY 2024-25, driven by buoyant growth in the tertiary sector, followed by manufacturing and agriculture sectors. India's economy has maintained a resilient growth trajectory, with real GDP increasing by 7.8% in Q1 FY 2025-26. In nominal terms, GDP grew by 8.8% highlighting India's steady pace towards Viksit Bharat@2047," he said.
"The Agriculture, Livestock, Forestry and Fishing has recorded a growth of 3.7% owing to the steady monsoon. On the other hand, the manufacturing sector grew by 7.7%, accompanied with robust growth in the tertiary sector by 9.3%, for Q1 FY 2026. This points to the stable and strong development of India despite continuous global volatilities," he added.
Hemant Jain stated that Gross Fixed Capital Formation (GFCF) increased by 7.8% in Q1 FY2026, indicating a sustained investment momentum in the country.
India's growth was boosted by growth in government final consumption expenditure growing by 7.4% during the same period, he said.
"Additionally, structured reduction in MPC rates accompanied with a softening trend of CPI and WPI inflation; resilient rural consumption with revival of urban consumption and government CAPEX are supporting India's growth trajectory," he said.
Going forward, the government's continuous focus on enhancing ease of doing business, strengthening supply chains and structural reforms are expected to propel India's growth momentum in the coming times, Hemant Jain said.
DK Srivastava, Chief Policy Advisor, EY India, said that 1Q 2025-26 real GDP growth at 7.8% outperforms RBI's expectations of 6.5% (August 2025 monetary policy statement) by a tangible margin.
"Significant improvements in the growth rate in the first quarter covering the period April to June 2025-26 as compared to the average growth in the last four quarters are notable in manufacturing and the three services sectors namely trade, transport, hotels et al., financial, real estate et al., and public administration et al. sectors. All these four sectors carry high shares together amounting to 72.1% of real GVA in 2024-25," he said.
Srivastava said growth in agriculture at 3.7% is robust, although marginally less than the corresponding average over the last four quarters of 4.4%.
"On the demand side, growth has been driven mainly by governments' contribution to demand through its higher capital expenditure. This is reflected in the high growth in gross fixed capital formation, which at 7.8% is higher than the average of the last four quarters at 7.0% by a margin of 0.8% points. Government final consumption expenditures, which showed only 2.9% growth on average in the last four quarters, grew by 7.5% in the first quarter of 2025-26. The only vulnerable segment of demand comprises exports which grew at 6.3%, lower than the growth of imports at 10.9% in 1Q 2025-26. As a result, the contribution of net exports to real GDP growth has turned negative at (-)1.4% points after showing positive contribution averaging 2.2% points in the last four quarters," he said.
Srivastava said that although fiscal data for the first four months show robust growth in central government expenditures of 20.2% with capital expenditure growing by 32.8% and revenue expenditure by 17.1%, the performance of tax revenues has been subdued, with direct taxes showing a contraction of (-)4.3%.
"Going forward, we expect the situation regarding net exports to continue to face challenges. As such, the GoI has to continue to provide fiscal support to overall growth through an emphasis on government capital expenditures and activate efforts for improving the government's tax revenue performance," he said. (ANI)