India has been able to maintain its position as the fastest growing major economy in the world, geopolitical tensions notwithstanding.

However, will the robust performance of the economy hold in the second quarter (July-September) as the crisis in West Asia is showing no signs of abating?

The economy, according to the Q1 data released by the Ministry of Statistics and Programme Implementation (MoSPI), grew by 7.8%, up from 6.9% in the corresponding period of the last fiscal.

Consumption Expenditure

The Private Financial Consumption Expenditure (PFCE) registered a growth of 7.1% during the quarter, up from 6.8% in Q1 of the previous fiscal. The PFCE refers to the total amount spent by households and non-profit institutions serving households on goods and services for their current consumption.

On the expenditure side, the Gross Fixed Capital Formation (GFCF) - an indicator of investment in productive capacity of the economy - recorded double-digit growth of 11.9% during the first quarter of the fiscal, up from 5.8% a year ago.

The country’s growth stands out when compared to the 4.3% growth recorded by China and 5.29% by Indonesia during the April-June quarter. The GDP growth is higher than the Reserve Bank’s projection of 7% and closer to SBI Research Ecowrap’s estimate of 8%.

“Overall, economic activity remained robust during the April-June quarter despite the adverse impact of the West Asia conflict on some sectors as well as the unfolding impact of the uneven monsoon,” said ICRA chief economist Aditi Nayar.

Riding On Manufacturing, Services 

Although the Q1 growth was lower than the 8.6% recorded in the January-March quarter, it remained well above the expectations of the Reserve Bank, mainly on account of the good performance of the manufacturing and services sector.

“India’s GDP growth moderated to 7.8% in Q1 FY2026-27 from the upward-revised 8.6% in Q4 FY2025-26, while exceeding ICRA’s estimate of 7% for the quarter. As we had anticipated, the Gross Value Added (GVA) growth also decelerated between these quarters, while printing above the 8% mark in Q1, and exceeding the GDP growth for the quarter,” Nayar added.

The tertiary sector, according to MoSPI, boosted the performance of the economy by registering a growth of 10%, mainly driven by ‘Financial, Real Estate, IT and Professional Services’, which observed 12.1% growth during the period.

The secondary sector, which includes manufacturing; electricity, gas, water supply and other utility services; and construction, recorded a growth of 8.6% during the quarter, up from 6.1% during the first quarter of the last fiscal.

In this segment, the manufacturing sector recorded a growth rate of 9.2% as compared to 8.3% in the corresponding quarter last fiscal.

Primary Sector Lags Behind

The primary sector, which includes agriculture and mining and quarrying, remained a laggard, recording a growth of 2.9% during the period, down from 5.3% in the year-ago period.

According to the data, the growth rate of the agriculture, livestock, forestry, and fishing sector decelerated to 3.6% during the first quarter of the fiscal year, as compared to 4.4% in the previous fiscal. 

The output of the mining and quarrying sector declined by 2.4% as against a growth of 12% in Q1 of
2025-26. 

The data is based on the new series of the annual and quarterly GDP estimates with base year 2022-
23 released by the government in June. 

In value terms, the GDP at constant prices in Q1 of 2026-27 has been estimated at ₹81.36 lakh crore, up from ₹75.46 lakh crore in the corresponding period of the last fiscal. In nominal terms, this figure works out to be ₹88.27 lakh crore, up from ₹80 lakh crore.