New Delhi, Aug.29,2025:The agriculture sector experienced a significant turnaround, with a 3.7% growth in real terms, up from 1.5% in the same quarter of the previous fiscal year
India’s economy has demonstrated remarkable resilience, achieving a 7.8% GDP growth in the first quarter (April-June) of the 2025–26 fiscal year. This performance not only surpasses the Reserve Bank of India’s projection of 6.5% but also defies expectations amid global economic uncertainties.
Sectoral Performance Highlights
Agriculture Sector
The agriculture sector experienced a significant turnaround, with a 3.7% growth in real terms, up from 1.5% in the same quarter of the previous fiscal year. This improvement reflects favorable monsoon conditions and effective government policies supporting the sector.
Manufacturing and Construction
The secondary sector, encompassing manufacturing and construction, recorded a 7.7% and 7.6% growth, respectively. These figures indicate a robust industrial activity, driven by increased domestic demand and infrastructure development projects.
Services Sector
The services sector led the growth trajectory with a 9.3% increase, up from 6.8% in the previous year’s first quarter. Key drivers include trade, hotels, transport, communications, and financial services, reflecting a rebound in consumer spending and business activities.
Government Spending and Consumption Patterns
Government Final Consumption Expenditure (GFCE) witnessed a substantial rise of 9.7%, compared to 4.0% in Q1 FY25. This surge indicates increased public spending on infrastructure and welfare programs. Private Final Consumption Expenditure (PFCE) grew by 7.0%, signaling sustained consumer confidence and spending.
Impact of U.S. Tariffs on Indian Exports
Despite the robust growth, India’s export sector faces challenges due to the United States’ imposition of additional tariffs on Indian goods. The tariffs, which have increased up to 50%, are expected to impact key export industries such as textiles, chemicals, and food products. The government is exploring measures to mitigate these effects and support affected sectors.
Comparative Analysis: India vs. China
In contrast, China’s economy grew by 5.2% in the same quarter, indicating a slowdown from previous periods. Factors contributing to this deceleration include weak domestic demand and challenges in the real estate sector. India’s higher growth rate underscores its economic resilience and potential for sustained development.
Economic Outlook and Future Projections
While the current growth is commendable, economists caution that the upcoming quarters may witness moderation due to external trade pressures and global economic conditions. Projections suggest a full-year GDP growth ranging between 6.0% and 6.5%, contingent on effective policy interventions and global trade dynamics.
India’s 7.8% GDP growth in Q1 FY26 is a testament to its economic resilience and the effectiveness of domestic policies. While challenges persist, the country’s diversified economic base and proactive measures position it well for sustained growth in the coming quarters.
