In a big slap to US President Donald Trump, who had called India a "dead economy", the Indian economy has registered a spectacular growth in the first quarter of the Financial Year 2025-26. The Indian GDP grew by 7.8% in Q1, exceeding the estimated 6.5%. The Q1 growth rate is 1.3 percentage points higher than last year.
India's GDP had grown 6.5% in the first quarter of the last fiscal and the growth in the same three-month period in 2025-2026 represents the fastest rise in five quarters. The previous highest GDP growth was 8.4% in the January-March quarter of 2024.
Interestingly, China's Q1 growth this year was 5.2% and India's 7.8% growth has ensured that it will continue to be the fastest-growing major economy.
The GDP growth was driven by the services and agricultural sectors, which saw a rise of 9.3% against 6.8% and 3.7% against 1.5%, respectively, in the first quarter last year. However, the construction sector's growth slowed to 7.6% this year against 10.1% last year.
The Reserve Bank of India had projected real GDP growth for 2025-26 at 6.5% with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%.
"The above normal southwest monsoon, lower inflation, rising capacity utilisation and congenial financial conditions continue to support domestic economic activity. The supportive monetary, regulatory and fiscal policies, including robust government capital expenditure, should also boost demand. The services sector is expected to remain buoyant, with sustained growth in construction and trade in the coming months," RBI Governor Sanjay Malhotra had said.
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