June 5 (Reuters) – India’s economy grew at an unexpectedly strong 7.8% in January-March, the government said on Friday, as better farm output and brisker construction activity helped offset weakening external demand emanating from the Middle East conflict.
The print, the second in an updated data series with a revised base year and wider coverage, was well above a forecast of 7.2% growth in a Reuters poll of economists.
India estimates GDP growth for the full year that ended in March at 7.7%, the National Statistics Office said, compared with a forecast of 7.6% from February.
COMMENTARY:
ALEXANDRA HERMANN PRASAD, LEAD ECONOMIST, OXFORD ECONOMICS, LONDON
“A notable deterioration in private consumption was offset by stronger investment.”
“We believe activity has already started slowing and will remain soft. The RBI’s dovish hold will cushion financing conditions, but not enough to prevent growth from undershooting its forecast for the fiscal year.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“Growth wrapped up FY26 on a strong note. High frequency data for rural and urban demand had pointed to relative resilience in the quarter. While the U.S.-Iran conflict broke out towards the end of the fourth quarter of FY26, output in the quarter was relatively insulated from bulk of adverse impact.”
“Markets are likely to move on from the backward looking data and focus on potential spillover risks into FY27, particularly given the prospect of a prolonged disruption in the supply of critical inputs to downstream industries, higher energy as well as food costs impacting purchasing power and tighter financial conditions.”
VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET, MUMBAI
“Looking ahead, uncertainty stemming from the ongoing West Asia conflict and elevated energy prices clouds the FY27 outlook, with growth likely moderating to 6.3%-6.5%.”
SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI FINANCIAL SERVICES, MUMBAI
“India’s economy continues to confound the pessimists.”
“Despite a weak global trade environment, domestic demand remained strong enough to keep India the world’s fastest-growing major economy.”
“Growth is likely to moderate in FY27 as global uncertainties rise, but with consumption, investment and policy support remaining favourable, an expansion of around 7% appears well within reach.”
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
“Given the uncertainty around the resolution of the conflict, elevated energy prices for an extended period poses a downside risk to growth in the near term, including muted prospects for investment demand, negative impact on corporate profitability and dampening consumer sentiments.”
