India Shrugs Off Oil Shock With 7.8% First-Quarter Growth

India’s economy expanded 7.8% in the first quarter of fiscal 2026-27, a result that surprised analysts and gave the government fresh evidence of economic resilience during a period of oil-price and supply-chain pressure.

Prime Minister Narendra Modi called the performance “a herculean feat,” saying India’s people had delivered strong growth despite oil shocks and global uncertainty. Finance Minister Nirmala Sitharaman credited the result to public effort, government reforms and what she described as agile economic management.

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India’s exemplary GDP growth of 7.8% during Q1 of FY 2026-27 is a herculean feat. The collective strength of our people ensured India delivered such growth despite oil price shocks and supply chain issues in the midst of global uncertainties. Doomsayers were doomed and India bloomed…yet again!

The data showed several domestic engines continuing to run strongly. Private final consumption expenditure rose 7.1%, while gross fixed capital formation increased 11.9%. Exports grew 12%, even as imports fell 1.1% in real terms. Services expanded 10% and manufacturing grew 9.2%, giving the economy its strongest sectoral support.

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The credit for this strong performance goes to the people of India and their hard work. Reforms undertaken by the NDA Government, together with an agile management of the economy, are bearing results.

The figures also contain signs of pressure. The National Statistics Office revised growth for the quarter ending March 2026 to 8.6%, up from the previously reported 7.8%. That revision indicates growth slowed after the outbreak of the West Asia war, even though domestic demand helped limit the deceleration.

Gross value added grew 8.2%, above the GDP rate, a gap the report linked to the war’s fiscal cost. The Reserve Bank of India’s monetary policy committee said growth remained supported by resilient domestic demand, expanding manufacturing and services, and robust exports. Economists nevertheless cautioned that the strong first-quarter result may not prevent a slowdown across the full fiscal year and could increase the prospect of a rate hike later in 2026.

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Growth continues to be supported by resilient domestic demand, sustained expansion in manufacturing and services activity, and robust exports, reaffirming India’s position as the world’s fastest-growing major economy.