India’s GDP Surges 7.8% in Q1 FY 2025-26, Experts React

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NSO data shows India’s economy growing faster than expected in April–June 2025, driven by services and manufacturing; market experts call it a sentiment boost but raise questions on weak core sector trends.

By S JHA

MUMBAI, August 29, 2025 — India’s economy recorded an impressive 7.8% GDP growth in the April–June quarter of FY 2025-26, well above the Reserve Bank of India’s forecast of 6.5% and higher than the 6.5% growth in the same period last year, according to official estimates released by the National Statistics Office (NSO).

At constant 2011-12 prices, India’s real GDP stood at ₹47.89 lakh crore, while nominal GDP at current prices rose 8.8% to ₹86.05 lakh crore, reflecting low inflationary pressure. Real Gross Value Added (GVA) grew 7.6%, driven by robust performance in services (9.3%), manufacturing (7.7%), and construction (7.6%), while agriculture expanded 3.7%. Mining (-3.1%) and utilities (0.5%) lagged behind.

On the expenditure side, Private Final Consumption Expenditure (PFCE) rose 7.0%, and Gross Fixed Capital Formation (GFCF) expanded 7.8%, suggesting steady investment flows. Government consumption spending bounced back, growing 9.7% in nominal terms.

The data drew a wave of reactions from economists and market watchers. Ajay Bagga, market expert and ex-CEO, on X said: “India’s GDP is up 7.8% in Q1 FY2026… The RBI forecast was 6.5%. This is a huge outperformance despite war, global policy uncertainty, and FPI outflows. Silver lining, green shoots, best Q GDP number in 5 quarters. Fastest growing major economy crown stays.”

Kyunghoon Kim, Head of India & South Asia Team, KIEP, on X said: “MIC DROP! India records 7.8% GDP growth in Q1 2025-26. Beats RBI projection of 6.5% by far. Very much ‘alive’!” His remarks were veiled reference to US President Donald Trump claiming that the Indian economy is dead.

Tamal Bandyopadhyay, a columnist, on X said that “…much higher than consensus estimates. Reuters poll estimated 6.7%. Buoyant services sector growth has led GVA at 7.6%.”

But MK Venu, senior financial journalist, on X, sounded caution, saying: “India Q1 GDP growth of 7.8% doesn’t square with a big deceleration in core sector growth at just 1.3% versus 6.2% last year! If steel, cement, electricity, oil, coal, gas are slowing, how can growth be higher?”

The divergence between strong GDP numbers and sluggish core sector growth has sparked debate on the sustainability of the momentum. Still, with India holding onto the title of the world’s fastest-growing major economy, the upbeat data is expected to buoy business and market sentiment.

The next quarterly GDP release (Q2 FY 2025-26) is scheduled for November 28, 2025. The GDP numbers came at a time when the US has slapped tariffs on India, while experts are arguing scale of impact on GDP.

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