The April-June quarter of the ongoing fiscal proved to be momentous for India’s GDP, which showed growth at 7.8 per cent, beating the previous five quarters.
The latest government data reveals the growth was mainly due to gains by the farm sector despite threats of impending tariff-imposition on Indian goods by the US.
This revelation has affirmed India’s position as the fastest-growing major economy, as China's GDP growth in the April-June period was 5.2 per cent.
The previous highest GDP growth of India was 8.4 per cent in January-March of 2024, as per the data.
As per the National Statistical Office (NSO) data released on Friday, the agriculture sector recorded a 3.7 per cent growth, up from 1.5 per cent in the April-June period of 2024-25.
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However, growth in the manufacturing sector increased only marginally to 7.7 per cent in the first quarter of FY26, compared to 7.6 per cent in the year-ago period.
Meanwhile, the gross value added (GVA), seen as a more accurate measure of underlying economic activity, grew 7.6 per cent in the three months to June, compared with 6.8 per cent in the previous quarter. GVA excludes indirect taxes and government subsidy payouts, which tend to be volatile.
Earlier this month, the Reserve Bank of India had projected real GDP growth for 2025-26 at 6.5 per cent, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent.
The United States imposed the highest tariff of 50 per cent on Indian exports, which came into effect on August 27.
While government sources said they’re hopeful of renewing tariff negotiations with the US, Prime Minister Narendra Modi has been advocating for adoption of locally-made goods to boost domestic demand and announced a GST reform rollout that would help India’s economy stay on track.
While the country’s economy remains resilient, buoyed by firm rural demand, trade tensions with the US could pose a downside risk, said the Reserve Bank in its monthly bulletin on Thursday.
The central bank kept key interest rates unchanged at 5.50 per cent earlier this month, with expectations that the economy will continue to grow 6.5 per cent for the fiscal year ending in March 2026.
Some economists opine, however, that the steep US tariffs and subdued retail inflation – which eased to an eight-year low of 1.55 per cent in July – could create room for limited monetary easing if needed.
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