India’s economy unexpectedly expanded 7.8% year-on-year in the April-June quarter, picking up from 7.4% in the previous three months, according to government data released on Friday.

With that, India remains the fastest growing major economy, as China’s GDP growth rate came in at 5.2% and United States’ at 3.3% in the three months to 30 June.

Economists polled by Reuters had forecast India’s GDP growth rate to ease to 6.7% in Q1, and that the economy would continue to slow due to 50% US tariffs on exports. Instead, the fourth largest economy in the world has expanded to the highest since January-March 2024, when it grew 8.4% year-on-year.

The gross value added (GVA), excluding indirect tax and subsidy, rose 7.6% in Q1 FY26, as against 6.8% in Q4 FY25 and 6.5% in Q1 FY25, government data showed.

India GDP Growth Rate: By Sector (YoY)

• Agriculture grew 3.7% in Q1 FY26 vs 1.5% in Q1 FY25
• Manufacturing grew 7.7% in Q1 FY26 vs 7.6% in Q1 FY25

Earlier this month, the Reserve Bank of India had projected India’s real GDP growth rate at 6.5% for FY26, with Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%.

“The super healthy GDP growth print in the first quarter has gotten a temporary boost from extremely soft deflator, front-loaded government spending (unlike last year), along with front loaded exports to the US,” Madhavi Arora, lead economist at Emkay Global, said in a note on Friday. “Some of these factors will reverse as we move ahead.”

“Besides, the effective macro hit from the 50% tariff imposition will start to feed via exports and have a domino effect on employment, wages and private consumption. This could further dampen private investment outlook and hinder growth.”

“However, on the face of it, a softer deflator effect and some consumption buffer from GST cuts could offset the hit in real GDP growth as we move to calendar year 2026.”