New Delhi, August 31, 2026

India’s economy grew by a strong 7.8 per cent in the first quarter of 2026-27 despite high energy prices and geopolitical uncertainty caused by the West Asia conflict. Manufacturing, investment, government spending and household consumption together powered the expansion.

The April-June performance was also higher than the Reserve Bank of India’s projection of 7 per cent. It reinforced India’s position as the fastest-growing major economy at a time when global trade and energy supplies remain under pressure. Data released by the National Statistics Office showed that real GDP grew by 7.8 per cent during the quarter. Nominal GDP, which includes the impact of price changes, increased by 10.3 per cent.

The figures carry greater significance because India remains heavily dependent on imported energy. The country meets nearly 90 per cent of its crude oil requirement through imports. It also imports about 60 per cent of the LPG consumed in the country.

A large share of these supplies has traditionally come from West Asia or passed through the Strait of Hormuz. The conflict in the region, therefore, posed a direct challenge to industries, transport, household budgets and government finances. Yet, the energy shock did not halt economic activity. Strong domestic demand and government support helped the economy maintain its momentum.

Manufacturing emerged as one of the main drivers. The sector expanded by 9.2 per cent, reflecting higher production and demand across industries. Electricity, gas and other utility services also grew by nearly 9 per cent. Financial, real estate and professional services recorded growth of more than 12 per cent. Household consumption increased by around 7 per cent. This showed that people continued to spend despite pressure from higher fuel and commodity prices. Investment rose by nearly 12 per cent. Spending on infrastructure, power, data centres, metals and industrial capacity contributed to this expansion.

Government capital expenditure provided another major push. Continued spending on roads, railways and other infrastructure projects created demand for cement, steel, engineering goods, transport and labour.

Tax collections also reflected the strength of economic activity. Gross GST revenue during April-June stood at about Rs 6.32 lakh crore, an increase of 8.4 per cent over the same period last year. June collections alone rose by 13.9 per cent to Rs 1.95 lakh crore.

GST and income-tax collections are not directly included in GDP. However, higher collections indicate rising transactions, better compliance and greater formalisation of the economy. They also give the government more space to continue its development and infrastructure programmes.

Prime Minister Narendra Modi hailed the GDP figures as a reflection of India’s strong growth momentum. In a social media post, he credited reforms and the hard work of the people for the country’s economic performance.

The Prime Minister’s response also carried a wider political message. The government and the BJP have repeatedly countered the Opposition’s gloomy assessment of the economy by pointing to India’s growth record. The latest figures have strengthened their argument that while doomsayers predict decline, India continues to grow.

The handling of the energy crisis also played an important role. India expanded its crude oil sourcing to nearly 40 countries and reduced its dependence on routes passing through the Strait of Hormuz. The Petroleum Ministry had said about 70 per cent of India’s crude imports were being routed outside the strategic waterway, compared with around 55 per cent earlier. Refineries also maintained high capacity utilisation. These measures helped avoid a major supply disruption.

The growth numbers came as Prime Minister Narendra Modi reached Bishkek after completing his visit to Uzbekistan. He is attending the Shanghai Cooperation Organisation summit in the Kyrgyz capital.

Prime Minister Narendra Modi is also scheduled to hold bilateral talks with Russian President Vladimir Putin on the sidelines of the summit. Energy, fertilisers, trade and connectivity are expected to figure in the discussions.

Russia has remained an important source of crude oil for India during a period of global uncertainty. Continued energy cooperation can help India secure supplies and limit the impact of disruptions in West Asia.

According to experts the 7.8 per cent growth does not remove all concerns. High crude prices, pressure on the rupee, global financial conditions and an uneven monsoon remain major risks. Mining and some consumer-facing services also showed weakness during the quarter.

However, the first-quarter figures show that India’s growth is no longer dependent on one sector alone. Consumption, manufacturing, services, investment and government spending

are working together. This broad base has helped the economy absorb a major external energy shock and begin the financial year on a strong note.