GDP growth at 5-quarter high of 7.8% in April-June

NEW DELHI: The country’s economic growth surged to a five-quarter high in April-June of the current fiscal year, led by faster than expected expansion in the manufacturing and services sectors and a robust farm sector.Data released by the National Statistics Office (NSO) on Friday showed gross domestic product (GDP) grew by 7.8% in the June quarter, higher than the 7.4% in the previous three-month period, and 6.5% growth in the first quarter of last year. The June quarter number is also above Reserve Bank of India‘s 6.5% estimate for the first quarter and higher than most estimates.

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The data also showed that gross value added, a measure of economic activity, grew by 7.6% during the April-June quarter. Private consumption expenditure increased 7% during the period.The robust numbers will be cheered all the more given the timing, coming amid tariff tension with the US, and marking a refutation of Donald Trump’s “dead economy” jibe at India.Demand may strengthen with festive boost: FinminThe strong first quarter data will also help India remain the fastest growing major economy in the world. The finance ministry said high frequency indicators for July 2025 indicate a carry-forward of the first quarter economic momentum and asserted that domestic demand is expected to strengthen in the coming quarters with the onset of the festive period and forthcoming GST rate changes. But it also cautioned that near-term risks for the economy remain largely for exports and capital formation due to tariff related uncertainties. Finance ministry sources said the data reflects strengthening momentum in the economy, anchored by strong macroeconomic fundamentals.Manufacturing and services sectors recorded strong performances during the three-month period. Manufacturing grew by 7.7% compared to 7.6% in the year-ago period while services grew by a robust 9.3%. The farm sector grew 3.7% in Apr-June compared to 1.5% in the same period a year earlier.“The robust GDP numbers for Q1. pleasantly higher than estimated consensus note is a tight hit on the rhetoric mimicking dead economy jibe…the Indian economy is alive and kicking well, unfettered by noise,” said Soumya Kanti Ghose, group chief economic adviser at State Bank of India in direct reference to the comments ofTrump who had referred to India’s as a “dead economy” and comments by leader of opposition Rahul Gandhi. The data showed government final consumption expenditure (GFCE) has bounced back, registering a 9.7% growth rate in nominal terms in the first quarter of FY 26 compared with 4.0% in Q1 of FY 2024-25. Finance ministry sources also said the private final consumption expenditure (PFCE’s) in GDP rose to 60.3%, the highest first quarter level in 15 years and the govt’s capital expenditure also sustained the momentum.