India Q1 GDP Grows 7.8%, Surpassing Estimates As Services & Manufacturing Surge

The growth reading, released Monday by the Ministry of Statistics and Program Implementation, matched the previous quarter's pace and came in well above the 7.1% expected in a Reuters poll of analysts.

Financial, real estate, information technology and professional services led the expansion, while manufacturing also improved sharply. Agriculture and allied sectors reported tepid growth, the ministry said.

The Reserve Bank of India had projected 7.0% growth for the quarter and 6.7% for the full fiscal year ending March 2027. The central bank has warned of slowing momentum due to a turbulent global environment, elevated energy prices, and supply chain pressures.

Despite concerns that geopolitical tensions could derail growth, Barclays India chief economist Aastha Gudwani said consumer demand has remained robust. Of the 20 high-frequency indicators tracked by the bank, only seven showed slower average growth in the April-to-June quarter compared with the previous three months, with automobile sales and loan growth holding up well.

El Niño conditions could still threaten the farm sector and rural demand if the monsoon is deficient, the RBI noted earlier this month. India's retail inflation has climbed for nine straight months to 4.45% in July, yet the central bank left interest rates unchanged at its August policy meeting.