Comment on GDP growth rate of 7.8 percent for the June quarter by Ajay Garg, CEO, SMC Global Securities
Below the Comment on GDP growth rate of 7.8 percent for the June quarter by Ajay Garg, CEO, SMC Global Securities
In the June quarter, India’s real GDP reached a five-quarter high of 7.8%, surpassing the RBI’s expectation of 6.5%. This growth was broad-based, led by the service sector, which expanded 9.3%, and the manufacturing sector, which grew 7.7%.
Service sector growth was fueled by trade, hotels, transport, and financial services. The manufacturing and construction sectors were supported by strong demand for housing, infrastructure, and industrial goods. Exports of goods and services also grew 6.3% in Q1 FY26, driven by a rush in shipments amid concerns over high US tariffs.
This exceptional growth comes at a time when India is facing the impact of 50% US tariffs, which were expected to slow down the GDP growth in the short term. However, lower inflation, easing food prices, tax reliefs in this year’s budget, and repo rate cuts have boosted demand and consumption, driving higher spending. Private final consumption expenditure rose to a three-quarter high of 7%, supported by a strong rural demand and healthy progress in kharif sowing.
Upcoming GST reforms this Diwali and India’s efforts to diversify its supply chain to other countries will help mitigate the limited impact of US tariffs. India is clearly leading the way, with expectations to become the second-largest economy in PPP terms by 2038, supported by robust domestic expenditure, strong manufacturing and service sectors, and fundamental domestic resilience.
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