Domestic demand fuels 7.8% GDP growth, fastest in five quarters

Stronger rural consumption, higher government spending and resilient services lifted India’s April–June GDP to its quickest pace in over a year, though fresh US tariffs imposed by President Trump now loom as a potential dampener on exports.

Kolkata: A surge in domestic demand has lifted the growth in real GDP of the country to a five-quarter high at 7.8 per cent in the April-June period of the 2025-26 financial year, experts said on Monday.

Crisil economists said nominal GDP growth slowed to 8.8 per cent in the first quarter of the FY'26 from 10.8 per cent due to easing inflation.

According to the Crisil economists' team, domestic private consumption growth strengthened, boosting both manufacturing and services. Higher government spending in the first quarter contributed to a sharp rise in government consumption expenditure, the rating agency said.

On the supply side, gross value added (GVA) rose to 7.6 per cent from 6.8 per cent.

ITC Ltd chairman nd managing director Sanjiv Puri said, "It is commendable that despite global challenges, India's GDP growth in the first quarter was recorded at 7.8 per cent, one of the highest in the last five quarters. As the nation takes decisive strides towards becoming the world's third largest economy, it is today an inspiring icon of resilience, growth and transformative opportunities."

India is a consumption-led economy, and its robust trajectory of GDP growth will fuel opportunities across all sectors of the economy, he said.

Given the promise of the Indian economy, the ITC Group remains committed to significantly investing in scaling up all its businesses and enhancing value addition in the economy through its large presence across agriculture, manufacturing and services, Puri said.

Crisil economists said that the private consumption expenditure has likely been fuelled by rural demand, which appears to be healthy with wages picking up.

The government support, on both consumption spending and investment, provided a cushion for growth.

Exports were also supportive of growth at 6.3 per cent in the first quarter, compared to 3.9 per cent in the corresponding previous quarter, the Crisil team said.

The services sector boosted the supply side, while the growth of the agricultural sector softened, which also holds true for the industry, according to the Crisil team.

India's economy grew by a stronger-than-expected 7.8 per cent in April-June, its fastest pace in five quarters, before US President Donald Trump imposed tariffs that now cloud the outlook, threatening key exports like textiles.