India grows 7.8 percent in Q1 as factories and services outrun the farm

India’s economy grew 7.8 percent in the April-June quarter of 2026-27. The National Statistical Office released the numbers on 31 August. Real GDP was Rs 81.36 lakh crore, up from Rs 75.46 lakh crore a year earlier. Nominal GDP rose 10.3 percent to Rs 88.27 lakh crore.

The print beat the Reserve Bank’s 7 percent projection for the quarter and a CNBC-TV18 poll of economists that had clustered around 7.5 percent. It was faster than the 6.9 percent of Q1 last year and slower than the 8.6 percent of January-March.

Gross value added grew 8.2 percent. That gap with GDP, which nets off product taxes and adds subsidies, means subsidies outran indirect taxes in the quarter.

Where the growth sat

The tertiary sector expanded 10 percent at constant prices. Inside it, financial services, real estate, IT and professional services grew 12.1 percent. Trade, hotels, transport and communications grew 8.5 percent, down from 9.8 percent a year earlier.

The secondary sector grew 8.6 percent. Manufacturing rose 9.2 percent, a three-quarter high, after 8.3 percent in Q1 last year. Construction grew 7.7 percent. Electricity, gas, water and other utilities grew 8.9 percent after a 1.8 percent contraction a year ago.

The primary sector grew 2.9 percent. Agriculture and allied activities rose 3.6 percent, slower than 4.4 percent last year. Mining and quarrying contracted 2.4 percent after a 12.4 percent jump in the year-earlier quarter. That high base is the simplest explanation for the mining drop. Delayed monsoon onset is the working explanation for the softer farm print.

Demand side

Gross fixed capital formation grew 11.9 percent. Private final consumption grew 7.1 percent. Government consumption grew 4.3 percent, slower than in the March quarter. Combined capital spending by the Centre, states and central public sector enterprises rose 16.9 percent in Q1, against 11.4 percent in FY26, according to the Chief Economic Adviser’s briefing.

V. Anantha Nageswaran told reporters that industrial momentum held through July and that food prices, the rest of the monsoon and global uncertainty are the three items to watch. Capital-goods production grew 16.1 percent in June. Industry credit was up 19.2 percent year on year.

What the comparisons show

China grew 4.3 percent in the June quarter. Indonesia grew 5.3 percent. India remains the fastest large economy on these prints. Bank of Baroda’s Madan Sabnavis said a full-year figure near 7 percent would be a fourth straight year above that mark. ASSOCHAM president Nirmal K. Minda tied the quarter to manufacturing, services and construction holding up while West Asia stayed messy and energy prices stayed high.

Deloitte India economist Rumki Majumdar read the manufacturing and services numbers as firms scaling ahead of festive demand and spending that had been deferred in the first-quarter uncertainty.

Prime Minister Narendra Modi used the 7.8 percent figure the next day to push a separate argument: spend the wedding, the gold and the holiday inside India. That is a political use of a statistical print. The statistics themselves say investment and factories did more work than farms and mines in April-June, and that the government’s own consumption grew more slowly than private spending.

The open question for the next two quarters is whether the monsoon closes the farm gap and whether imported energy costs from the Hormuz fighting show up in the Q2 deflator. Nominal growth at 10.3 percent already hints that prices are doing more of the work than they did a year ago, when nominal GDP grew 8.1 percent.