India’s economy registered stronger-than-expected growth in the first quarter of the current financial year, expanding by 7.8% between April and June 2025, according to data released by the National Statistical Office (NSO).
This marks a significant improvement from the 6.5% growth seen in the same period last year and is the country’s fastest quarterly expansion in the last five quarters.
The performance beat both market expectations and the Reserve Bank of India’s (RBI) projection of 6.5% for the quarter. The last time India recorded a higher growth rate was in January–March 2024, when GDP rose 8.4%. By comparison, China’s economy expanded 5.2% during April–June this year, reinforcing India’s position as the world’s fastest-growing major economy.
The surge was largely supported by strong showings in services and agriculture. The services sector, which makes up a significant share of the economy, grew 9.3% year-on-year, well above last year’s 6.8%. Agriculture also delivered a healthy boost, expanding 3.7% compared to just 1.5% in the same quarter of 2024–25, aided by favorable monsoon conditions. However, growth in the construction sector eased, slowing to 7.6% from 10.1% a year earlier.
The upbeat figures come at a time when concerns about global trade tensions and tariff-related disruptions, particularly involving the United States, have raised questions about the resilience of emerging economies. Despite these headwinds, domestic factors appear to have shielded India’s growth momentum.
Earlier this month, the RBI forecast overall GDP growth for 2025–26 at 6.5%, with expectations of moderation in the coming quarters—6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. Governor Sanjay Malhotra attributed the positive outlook to supportive conditions, including a strong monsoon, declining inflation, higher capacity utilization, and sustained public investment.
“The combination of accommodative policies, improved financial conditions, and robust government capital expenditure is expected to drive demand further. The services sector, in particular, should continue to remain buoyant alongside steady activity in construction and trade,” Malhotra said.
With growth surpassing forecasts, policymakers now face the dual challenge of sustaining momentum while ensuring price stability in an uncertain global environment.
