New Delhi: India’s economy has opened the new financial year with a powerful growth surge, expanding 7.8% in the April-June quarter, sharply higher than the 6.9% recorded in the corresponding period last year and signalling that domestic economic momentum remains remarkably resilient despite a turbulent global environment.
The latest GDP numbers, released on Monday, surpassed expectations and provided a strong vote of confidence in the underlying strength of the Indian economy. Real GDP at constant prices rose to Rs 81.36 lakh crore in Q1 FY27, from Rs 75.46 lakh crore a year earlier, while real gross value added (GVA) grew by an even stronger 8.2%.
The performance comes against a backdrop of geopolitical tensions, volatile energy prices, trade uncertainties and continuing weakness in parts of the global economy. Yet, India’s growth engine appears to have remained firmly anchored in domestic demand, with manufacturing, services, consumption and investment providing the crucial momentum.
Manufacturing was among the standout performers, expanding 9.2% during the quarter. Strong activity in services and financial sectors, coupled with resilient private consumption and investment, further supported growth. The continued thrust on infrastructure and public capital expenditure has also helped sustain economic activity and crowd in private investment.
The latest number assumes greater significance when viewed against the broader trajectory. GDP had expanded 8.6% in the previous quarter, meaning growth has remained above 7% for two consecutive quarters. India is therefore entering FY27 with considerable momentum, even as policymakers remain watchful of external risks.
Prime Minister Narendra Modi described the 7.8% growth as an “exemplary” performance, saying the numbers reflected the strength and resilience of the Indian economy despite global uncertainties. He also highlighted the role of reforms and the collective efforts of citizens in driving the economy forward.
“Doomsayers were doomed and India bloomed… yet again,” Modi said in his reaction to the data.
The government’s optimism is understandable. The Q1 numbers suggest that India’s growth story is increasingly being driven by the depth of its domestic economy, giving it some insulation from global shocks. A large consumer base, rising investment, expanding manufacturing capacity and a rapidly growing services sector continue to provide multiple engines of growth.
But the headline number also comes with a caveat. Sustaining growth at these levels will require the current momentum to translate into stronger job creation, higher household incomes and a broader revival in private investment. Global energy prices, geopolitical disruptions, trade tensions and financial-market volatility could still weigh on the outlook.
The Reserve Bank of India has projected 6.7% growth for FY27, leaving the possibility of an upward surprise if domestic demand and investment maintain their current strength.
For now, however, the message from the first quarter is unambiguous: India has started FY27 on a high - and the domestic growth engine is showing little sign of slowing down.
BI Bureau
