India’s Economy Expands 7.8% in Q1 FY27 As Services and Fixed Investment Drive Growth

India recorded GDP growth of 7.8% in the April-June quarter of FY27, as per the Economic Times report citing official data released on August 31, 2026.  

Although lower than the revised 8.6% growth in the previous three months, the figure exceeded the 7.3% estimate in a Moneycontrol survey. The economy had grown 6.9% a year earlier, while nominal GDP growth stood at 10.3%. 

Services Sector Growth 

Services grew 10% in the June quarter. Financial, real estate and professional services expanded 12.1%, while trade, hotels, transport, communication and broadcasting-related services grew 8.5%. 

Manufacturing rose 9.2% and construction increased 7.7%. The electricity sector grew 8.9%, while public administration, defence and other services recorded growth of 7.5%. 

Investment Growth Remains High 

Gross fixed capital formation rose 11.9% during the quarter, while private final consumption expenditure grew 7.1%. Government final consumption expenditure increased 4.3%. 

The Centre's capital expenditure rose 18.6% in Q1 FY27, against 9.1% growth in the previous quarter. Industrial production grew by an average of 5.7%, and services exports increased 13.1%. 

Primary Sectors See Mixed Performance 

Agriculture, forestry and fishing expanded 3.6% during the quarter, slower than the 4.4% growth seen a year earlier. Mining, meanwhile, declined 2.4%, reversing the 12.4% growth recorded in the corresponding period last year. 

Gross value added grew 8.2%, compared with 7.1% a year ago and 8.7% in the previous quarter. 

Inflation Concerns Continue 

The growth figures were released amid higher energy prices and supply chain disruptions linked to the West Asia conflict. Uncertainty over the Strait of Hormuz and uneven rainfall have added to concerns around inflation. 

A Moneycontrol poll of 17 economists projected median retail inflation at 5% for FY27, with estimates ranging from 4.7% to 5.2%. Higher prices could put pressure on household consumption in the coming quarters. 

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Conclusion  

India's Q1 FY27 GDP growth was supported by services and investment spending, while slower farm-sector growth and a contraction in mining remained drags. 

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