Indian GDP Grows More than Expected in Q4FY26

The Indian real gross domestic product expanded by 7.8% from the previous year in the March quarter of 2026, slowing slightly from the upwardly revised 8% growth from the earlier period, but still well ahead of market expectations of 7.2%. The data reflected India's momentary resilience to higher energy prices and a week rupee following efforts to source oil outside Russia and the outbreak war in the Middle East. Output was higher for manufacturing (7.3%), trade, hotels, transportation, and communication (12.5%), financial and real estate services (10.4%), and construction (8.4%), offsetting slower growth in mining and quarrying (5.4%) and agriculture and feedstock (3.6%). For the whole 2026 financial year, the Indian GDP expanded by 7.7%, the most since the rebound from the Covid pandemic recession in FY2022.

The Indian real gross domestic product expanded by 7.8% from the previous year in the December quarter of 2025, inching down from the upwardly revised, six-quarter high of 8.4% in the earlier period but firmly above market expectations of 7.2%. Despite the slowdown, the growth rate remained the highest among G20 economies, signaling a degree of resilience of the Indian economy to the 50% tariffs from the United States that were passed in August, aided by an increase in government spending and GST tax cuts to support consumer confidence and private investment. Private consumption expanded by 8.7%, accelerating from the 8%. In turn, government expenditure slowed (4.7% vs 6.6% in FY26Q2) and gross fixed capital formation moderated (7.8% vs 8.4%). Net external demand contributed negatively to GDP growth, as exports expanded by 5.6% and imports rose by 8.6%. With the reading, the GDP growth for FY2026 was revised higher to 7.6%, equalling the highest since FY2022.

The Indian gross domestic product expanded by 8.2% from the previous year in the September quarter of 2025, well above the market consensus of a 7.3% expansion to pick up from the 7.8% growth rate from the earlier period. It was the sharpest annual growth rate since the March quarter of 2024, reflecting the resilience of the Indian economy to the 50% tariffs from the United States that were passed in August, aided by an increase in government spending and GST tax cuts to support consumer confidence and private investment. Consequently, consumer spending growth accelerated to 7.9% from 7% in the earlier period, accounting for 57% of all GDP output. On the value added front, manufacturing expanded by 9.1% in the period, financial, real estate & professional services surged 10.2%, and construction output rose by 7.2%. Real growth was also supported by a softer deflator, as retail inflation approached record lows and wholesale prices deflated.