Last Updated on August 29, 2025 9:11 am by BIZNAMA NEWS
ADITYA RAJ DAS / New Delhi
India’s economy registered a strong start to the financial year 2025–26, with Gross Domestic Product (GDP) growing 7.8% in the April–June quarter, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI). This marks the fastest growth in five quarters, surpassing the 7.4% expansion in Q4 of FY25 and significantly higher than the 6.5% growth recorded in the same quarter last year.
Nominal and Real Growth
While real GDP surged 7.8%, Nominal GDP grew 8.8% in Q1 FY26, reflecting robust momentum despite global uncertainties. Economists view this as a sign of resilience in the Indian economy, driven by manufacturing and infrastructure-led investments.
Agriculture, Manufacturing, and Construction
The performance across sectors was mixed but encouraging.
- Agriculture and allied activities posted a 3.7% growth, far higher than the 1.5% recorded in Q1 FY25, underscoring recovery in farm output.
- Manufacturing expanded 7.7%, supported by industrial demand, while construction rose 7.6%, reflecting strong activity in housing and infrastructure.
- Services and allied activities also registered healthy growth, contributing to overall stability in the economy.
Consumption and Investment Trends
On the expenditure side, Gross Fixed Capital Formation (GFCF), an indicator of investment demand, rose 7.8% year-on-year, signaling ongoing momentum in infrastructure spending. However, Private Final Consumption Expenditure (PFCE), a key driver of household demand, grew 7.0%, slower than the 8.3% expansion a year earlier, pointing towards moderated consumer spending.
Government expenditure provided a major push. Government Final Consumption Expenditure (GFCE) jumped 9.7% in nominal terms, a sharp rebound compared to just 4% growth in Q1 FY25.
Outlook Ahead
Analysts suggest that sustained public investment, improving rural demand, and stable inflation may support growth in the coming quarters. However, global headwinds, export demand fluctuations, and monsoon variability remain potential challenges.
India’s strong Q1 growth reinforces its position as the world’s fastest-growing major economy, with policymakers optimistic that the momentum will continue through FY26.
