India’s economy expanded 7.8% in the April–June quarter of FY27 (Q1 FY27), faster than the 6.9% growth in the same period last year but slower than the 8.6% recorded in the previous quarter (Q4 FY26). The data, released by the Ministry of Statistics and Programme Implementation (MoSPI), shows that domestic demand, manufacturing and a broad services rebound kept growth resilient despite global uncertainties.
Topline numbers
- Real GDP growth (Q1 FY27): 7.8% year-on-year, up from 6.9% in Q1 FY26 and down from 8.6% in Q4 FY26.
- Nominal GDP: Rose 10.3% to ₹88.27 lakh crore, from ₹80 lakh crore a year earlier.
- Real GVA (gross value added): Grew 8.2% to ₹73.82 lakh crore, indicating strong underlying production activity.
Sectoral performance: Who drove growth?
Manufacturing and industry
The secondary sector was a key engine of growth.
- Manufacturing grew 9.2%, up from 8.3% in Q1 FY26, supported by capital goods, infrastructure-linked activity and exports.
- Electricity, gas, water supply and other utilities rebounded sharply to 8.9% after a contraction in the year-ago quarter.
- Construction expanded 7.7%, reflecting continued infrastructure spending and housing activity.
- Overall, the secondary sector grew around 8.6% in real terms.
Services sector
The services (tertiary) sector grew about 10%, up from 8% a year ago, and remained the biggest contributor to GDP.
Key services sub-sectors:
- Financial, real estate, IT and professional services: Expanded around 12.1%, the fastest-growing major services cluster.
- Trade, hotels, transport and communication: Grew roughly 8.5%.
- Public administration, defence and other services: Rose about 7.5%, pointing to higher government activity and related spending.
Agriculture and mining: The weak spots
Not all sectors kept pace.
- Agriculture and allied activities grew 3.6%, slower than 4.4% in Q1 FY26, amid a delayed monsoon onset and base effects.
- Mining and quarrying contracted 2.4%, after a strong 12.4% expansion in the same quarter last year, dragging down the primary sector.
- The primary sector as a whole grew only 2.9%, down from 5.3% a year earlier.
Demand side: Consumption and investment
On the demand side, two components stood out:
- Private final consumption expenditure grew around 7.1%, showing that household spending remained firm despite high energy prices and global trade worries.
- Gross fixed capital formation (investment) surged about 11.9–12% in real terms, underlining strong capex by both the government and private sector.
Why Q1 was stronger than last year
The acceleration from 6.9% to 7.8% compared with Q1 FY26 reflects:
- A manufacturing upturn, especially in capital goods and export-oriented industries.
- A services rebound, led by finance, real estate, IT and professional services, along with utilities and public administration.
- Robust investment and continued government capital expenditure, which helped offset external shocks from the West Asia conflict and elevated crude prices.
Risks to watch
Even as the 7.8% print beat the Reserve Bank of India’s 7% projection and most market estimates, some risks remain:
- High oil prices and geopolitical tensions in West Asia could feed into inflation and import costs.
- Monsoon variability may affect agriculture output and rural demand in the coming quarters.
- Base effects in mining and some industrial segments could limit growth momentum.
Still, with manufacturing and services leading, India remains the fastest-growing major economy, with Q1 FY27 underlining the strength of domestic demand and investment-led growth.
