India’s economy expanded by 7.8% in the quarter ending June, comfortably surpassing analyst expectations and signaling continued resilience in Asia’s third-largest economy.
A Reuters poll had forecast growth of 7.1% for the period, meaning the actual figure came in significantly ahead of consensus estimates across the board.
The result matches the 7.8% growth recorded in the previous quarter, suggesting India’s economic momentum has remained broadly steady despite a challenging global backdrop.
Financial services, real estate, information technology, and professional services were identified as the primary drivers behind the strong quarterly performance.
India’s Ministry of Statistics and Program Implementation noted that manufacturing and services sectors saw sharp improvements, even as agriculture and allied sectors reported only tepid growth.
Aastha Gudwani, India chief economist at Barclays, told CNBC’s Inside India that the Iran war had not impacted India’s growth as widely feared heading into the quarter.
Gudwani noted that of the 20 high-frequency indicators tracked by Barclays, only seven showed the April-to-June quarter average growth rate running slower than the January-to-March quarter.
She added that consumer demand has stayed “robust,” with manufacturing, service sectors, automobile sales, and loan growth also “holding up really well.”
The Reserve Bank of India had projected growth of 7.0% for the June quarter and 6.7% for the full financial year ending March 2027, both of which now appear conservative against actual results.
The RBI had cautioned earlier this month that while India’s economy remained “resilient” amid geopolitical uncertainty, conditions were expected to slow during the current financial year.
The central bank flagged that “the turbulent global economic environment” would likely weigh on domestic activity, with energy prices and supply chain pressures remaining “elevated and uncertain.”
El Niño conditions pose an additional risk, with the RBI warning that a deficient and uneven south-west monsoon could hurt the farm sector and rural demand in the months ahead.
Inflation has climbed steadily for nine consecutive months, reaching 4.45% in July, reflecting the ongoing pressure of elevated energy prices on the broader Indian economy.
Despite that inflationary trend, the RBI opted not to raise interest rates at its August policy meeting, diverging from the approach taken by several of its Asian counterparts.
