India’s economy logged a robust 7.8% growth in the April-June quarter of the current financial year, surpassing economists’ 6.5% estimate and marking a 1.3 percentage point improvement over the same period last year. The gain represents the strongest quarterly expansion in five quarters, with the previously high pace being 8.4% in the January-March 2024 quarter. By comparison, China’s economy grew 5.2% in April-June this year, keeping India as the fastest-growing major economy.
The growth was broad-based, led by the services sector, which expanded 9.3% in the quarter, up from 6.8% a year earlier. Agriculture rose 3.7% versus 1.5% a year ago, while construction grew 7.6% this quarter, though it cooled from 10.1% a year earlier.
In a broader policy outlook, the Reserve Bank of India had projected real GDP growth for 2025-26 at 6.5%, with quarterly progression of 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. RBI officials have attributed the higher-than-expected start to the mix of favorable factors: an above-normal monsoon, easing inflation, rising capacity utilization, and conducive financial conditions that support domestic activity. They noted that supportive monetary, regulatory, and fiscal policies, including robust government capital expenditure, should sustain demand. The services sector is expected to stay buoyant, complemented by continued momentum in construction and trade in the coming months.
What this means for the economy and audiences:
– The strong Q1 print reinforces India’s position among the world’s fastest-growing economies, even as external headwinds persist in global trade.
– A resilient services sector, along with rural and agricultural resilience, points to steady domestic demand and potential benefits to employment and incomes.
– Policy signals from the RBI and ongoing government capex could help sustain momentum, though watchers will be watching for inflation trajectories and external demand dynamics.
Overall, the upbeat first-quarter numbers provide a hopeful signal that India’s growth engine remains firmly in gear, supported by robust domestic activity and prudent policy settings.