India’s GDP Performance

Introduction

• India’s economy began 2026-27 on a strong note, with real GDP growth accelerating to 7.8% in Q1, riding on manufacturing and services, while real GVA rose 8.2%.
• Investments rose by 11.9%; household consumption grew 7.1% and exports grew by 12.0%.
• This momentum continued into July, with industrial production up 6.7%, while cumulative merchandise and services exports during April-July rose 13.16% year-on-year.
• Credit to industry and services grew 20.0% and 22.9%,respectively, in July.

India’s Macroeconomic Position

• India entered 2026-27 amid persistent geopolitical tensions and uncertainty around global trade. Despite these external pressures ,real GDP grew by 7.8% in Q1 2026-27.
• The outcome marked the highest Q1 real GDP growth during the four-year period from 2023-24 to 2026-27. This has been supported by buoyant domestic demand and gains in manufacturing and services.
• The International Monetary Fund (IMF) has also highlighted India’s role in the global economy.
• In July 2026, it described India as one of the world’s fastest-growing economies and a key engine of global growth.
• India’s sovereign credit assessment further reflects this confidence. In August 2026, S&P Global Ratings affirmed India’s ‘BBB/A-2’ sovereign ratings with a Stable Outlook.
• This followed the upgrade of its long-term rating to ‘BBB’ in 2025, after an 18-year gap.

A Stronger Start to 2026-27

Growth Accelerates in the First Quarter

• Economic growth strengthened in the first quarter (Q1) of 2026-27. This outcome has exceeded the Reserve Bank of India’s estimate of 7.0% for the quarter.
• Real GDP, or GDP at Constant Prices, is estimated at ₹81.36 lakh crore in Q1 FY 2026-27. It recorded 7.8% rise, compared with 6.9% in Q1 FY 2025-26.
• Nominal GDP, or GDP at Current Prices, is estimated at ₹88.27 lakh crore. It recorded 10.3% rise, compared with 8.1% last year.

• Real GVA is estimated at ₹73.82 lakh crore , recording 8.2% growth, compared with 7.0% last year.
• Nominal GVA is estimated at ₹80.53 lakh crore , recording 11.5% growth, compared with 8.1% last year.

Revised Estimates Strengthen the Growth Picture

• Real GDP has been revised upwards for the previous three financial years. The revisions show that the first-quarter performance follows a stronger growth trajectory than previously estimated.

Composition of Growth Drivers

Trends Across Key Expenditure Components

• Economic activity in the first quarter was supported by a sharp rise in investment, firm household consumption and stronger exports.

Growth Extends Across Major Sectors

• The strength in expenditure was also reflected on the production side, with the tertiary and secondary sectors expanding at a faster pace.
• In terms of Real GVA, the tertiary sector grew by 10.0% in Q1 2026-27, up from 8.0% in Q1 2025-26. Within the sector, financial, real estate, IT and professional services recorded 12.1% growth.
• The secondary sector expanded by 8.6% in Q1 2026-27, compared with 6.1% in the corresponding quarter of the previous year.
• Manufacturing recorded 9.2% growth, supported by strong output across key segments. Several manufacturing categories also performed well during the quarter:

• Under the IIP, capital goods production also increased by 15.2% in Q1 2026-27, compared with 8.8% a year earlier. Infrastructure/ construction goods also recorded higher growth of 7.2%, up from 6.1%.

Recent Indicators Signal Continued Momentum

Industrial Activity Remains Firm

• Industrial production grew by 6.7% in July 2026, compared to 5.4% last year. It increased by 6.3% in April-July 2026-27 compared 4.0% last year same period.
• Capital goods production rose by 16.1% in July 2026 over July 2025. Intermediate goods increased by 10.0% and infrastructure and construction goods by 6.9%.
• The Index of Core Industries (ICI) recorded year-on-year growth of 5.4% in July 2026, compared with July 2025. During April-July 2026-27, the ICI grew by 4.3%, up from 1.5% in the corresponding period of the previous year.

Strong Export Performance

• India’s combined merchandise and services exports reached an estimated US$ 80.14 billion in July 2026, increasing by 13.31% over July 2025.
• During April-July 2026-27, cumulative exports were estimated at US$ 316.42 billion. This is 13.16% higher than the US$279.63 billion recorded during April-July 2025-26.

Credit Expands Across Major Sectors

• Bank credit growth strengthened across major sectors in July 2026.
• Credit to agriculture and allied activities grew by 17.0% year-on-year, compared with 7.3% in July 2025.
• Credit to industry increased by 20.0%, up from 6.5% in July 2025.
• Credit to the services sector grew by 22.9%, compared with 10.2% in July 2025.

Recent Policy Measures Supporting Growth

• Policy measures introduced during 2026 have complemented these economic trends, spanning manufacturing, energy security, trade and investment, and agriculture.

Manufacturing and Industry

• The Mobile Phone Manufacturing Scheme (July 2026) has an outlay of ₹62,500 crore through 2030-31.
• It aims to further expand production, deepen value addition and strengthen global competitiveness.
• Approved in July 2026, Semicon 2.0 has a budget outlay of ₹1,27,500 crore.
• It supports chip design and manufacturing, advanced packaging, research, materials, equipment and talent development.
• Approved in July 2026, the BHAVYA Rasayan Scheme has an outlay of ₹3,030 crore for a period of 5 years from FY 2026-27 to FY 2030-31.
• It will support the establishment of three dedicated chemical parks across the country.
• Emergency Credit Line Guarantee Scheme 5.0 (ECLGS 5.0) targets additional credit flow of ₹2.55 lakh crore in response to the West Asia situation.
• It provides 100% guarantee coverage for MSMEs and 90% for non-MSMEs.
• Passed by Parliament in August 2026, the MSME Development (Amendment) Bill, 2026 simplifies compliance and supports MSME development and competitiveness.

Energy Security

• Samudra Manthan, the National Offshore Exploration Scheme, has an outlay of ₹84,084 crore through FY 2030-31. The Scheme supports exploration to unlock India’s offshore energy potential.
• The Scheme for Promotion of Surface Coal/Lignite Gasification Projects was approved in May 2026 with an outlay of ₹37,500 crore.
• It supports the 100 MT coal gasification target by 2030 and aims to reduce import dependence.
• GOBARdhan, the National Circular Bioenergy Scheme, was approved in August 2026 with an outlay of ₹23,731 crore.
• The Scheme will be implemented from FY 2026-27 to FY 2035-36. It aims to increase compressed biogas production from agricultural, animal and municipal organic waste.
• Approved in July 2026, Pradhan Mantri Surya Sarovar Yojana (PM-SSY) has an outlay of ₹5,070 crore.
• It supports 5,000 MW of floating solar projects with co-located energy storage, with projects sanctioned during FY 2026-27 to FY 2030-31.

Trade and Investment

• The India-UK CETA and Agreement on Social Security entered into force on 15 July 2026.
• It provides zero-duty access for nearly 99% of India’s exports to the UK.
• The India-Israel Bilateral Investment Agreement (BIA) entered into force on 4 July 2026.
•  It aims to strengthen bilateral economic ties and provides a more secure and predictable framework for investment.
• In June 2026, reforms were announced to expand Foreign Portfolio Investor (FPI) participation in Government Securities.
• Key measures include tax exemptions, wider coverage under the Fully Accessible Route and streamlined investment norms.
• The reforms are intended to attract long-term foreign capital and deepen India’s debt market.
• Launched in May 2026, the Bharat Maritime Insurance Pool (BMIP) carries a sovereign guarantee of ₹12,980 crore. It provides maritime risk cover while reducing dependence on foreign insurers amid global volatility.

Agriculture: Farm Income and Production Support

• The continuation of Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) from FY 2026-27 to FY 2030-31 has been approved with an outlay of ₹3.15 lakh crore.
• The scheme provides eligible farmer families income support through the Direct Benefit Transfer (DBT) system.
• For Marketing Season 2026-27, the Government increased MSPs for 14 Kharif crops to ensure remunerative prices for farmers. The highest absolute increases were for sunflower seed, cotton, nigerseed and sesamum.
• Approved in May 2026, the Mission for Cotton Productivity (Kapas Kanti) has an outlay of ₹5,659.22 crore for 2026-27 to 2030-31.
• It links cotton farmers with modern research and technologies, reduces pest risks, and strengthens production systems and agricultural trade.
• The National Investment Policy for Urea-2026 (NIPU-2026) aims to promote new investment in gas-based urea manufacturing units.
• It supports higher domestic production and India’s goal of self-sufficiency in urea.
• These measures build on a decade of policy initiatives including Make in India, Production Linked Incentive (PLI) schemes, PM-KISAN, the Export Promotion Mission and others.

Conclusion

• India’s economic performance at the start of 2026-27 reflects broad-based momentum across key areas of the economy.
• Investment has accelerated, household consumption has remained firm, while manufacturing, services and exports have provided additional support.
• More recent indicators show that this strength has carried beyond the first quarter.
• Continued government support through various policy measures has also helped maintain the pace of economic activity.

Reference

PIB| India’s GDP Growth