India’s GDP grew by 7.8% in the first quarter of the fiscal year 2026-27 (Q1 FY27) even though there was uncertainty in the global economic scenario. The NSO’s report released on August 31 showed that India’s GDP grew to ₹81.36 lakh crore, compared to ₹75.46 lakh crore in the corresponding quarter of FY26. The growth rate of 7% was forecasted by the Reserve Bank of India, whereas the economic growth was expected to be slower in some economists’ surveys.
Real GDP Growth Exceeds Expectations
The real GDP grew by 7.8% compared to the previous year in Q1 FY27. It was better than the forecasted 7% growth by RBI and the 7.3% by Moneycontrol poll and 7.1% by Reuters survey median.
The better-than-expected economic growth shows the resilience of the economy during April-June 2026.
GDP Nominal Growth Hits 10.3%
The nominal GDP, reflecting the growth in actual GDP along with the impact of change in prices, saw a growth rate of 10.3% in Q1 FY27.
The growth has been to ₹88.27 lakh crore, as against ₹80 lakh crore in Q1 FY26.
The higher growth rate of nominal GDP than the actual GDP is due to the contribution of the price component as well.
Acceleration in GVA Growth Rate to 8.2%
Gross Value Added (GVA), which is a measure of economic output excluding the net taxes on the product, has grown by 8.2% in Q1 FY27, an improvement of 7% registered a year ago.
The real GVA has improved to ₹73.82 lakh crore from ₹68.21 lakh crore in Q1 FY26. The growth in nominal GVA has been even sharper, to ₹80.53 lakh crore.
The information related to GVA growth provides more detail about the sectors behind the economic growth.
Services Sector Grows at Fastest Pace
The services sector has grown at the highest rate among all major segments, growing 10% during Q1 FY27, as compared to 8% a year ago.
Within the services sector, the financial, real estate and professional services grew at the highest pace of 12.1%. The trade, hotels, transport, communication and broadcasting services have grown 8.5%, while the growth rate of public administration, defense and other services has been 7.5%.
In the industry segment, the manufacturing has seen growth of 9.2%, while the construction has grown 7.7%.
The agriculture, forestry and fishing sector has seen comparatively lower growth of 3.6%.
Investment and Consumption Drive Growth
The domestic demand continued to be a critical contributor to the growth process in the quarter under consideration.
The Private Final Consumption Expenditure (PFCE) rose by over 9.9% and the Government Final Consumption Expenditure (GFCE) rose by 9.5%.
The investments were exceptionally high as the Gross Fixed Capital Formation (GFCF) soared by 20.4% in April to June 2026.
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