India’s economy expanded by 7.8% in the first quarter of the fiscal year ending June 2026, outperforming analyst forecasts of 7.1%. This growth matched the previous quarter's rate and was largely driven by strong performances in the financial, real estate, information technology, and professional services sectors. While agricultural growth remained subdued, improvements were noted in manufacturing and services activities, according to data released by the Ministry of Statistics and Program Implementation.

Barclays’ India chief economist Aastha Gudwani highlighted that despite external geopolitical pressures, including concerns over the Iran conflict, India's economy demonstrated resilience. She pointed out robust consumer demand alongside stable manufacturing output, automobile sales, and credit growth as key factors supporting economic momentum. Most high-frequency economic indicators suggest sustained strength in the April-June period compared to the previous quarter.

Earlier in August, the Reserve Bank of India (RBI) cut its growth forecasts, projecting a 7.0% expansion for the second quarter and 6.7% for the full financial year ending March 2027. The central bank expressed caution due to ongoing global uncertainties, elevated energy costs, and supply chain disruptions. Potential adverse weather patterns tied to El Niño also pose risks to agriculture and rural demand, which may affect economic performance going forward.

Inflationary pressures remain a concern, with consumer inflation rising steadily over nine months to 4.45% in July. The RBI, unlike some regional central banks, chose not to raise interest rates in August’s policy review despite these inflation trends. The decision reflects the bank's focus on sustaining economic growth amid ongoing external challenges and domestic uncertainties.