India’s economy expanded strongly in the first quarter of FY27 with GDP rising 7.8%. This was higher than the 6.9% growth recorded a year earlier and above most forecasts. The expansion was supported by household consumption, resilient exports and a sharp rise in government capital expenditure. These factors helped offset inflationary pressures and supply chain disruptions caused by the US Iran war.
Industrial output grew 5.7% while passenger vehicle sales surged 25.6%, reflecting strong demand. Corporate revenues remained steady though oil companies faced margin pressure due to higher energy costs. Tax cuts in GST and income tax supported disposable incomes and encouraged spending. Government capital spending cushioned the impact of rising prices and kept investment momentum alive.
Economists caution that growth may moderate in the coming quarters. India imports more than 85% of its oil and crude prices above 90 dollars per barrel could hurt activity. The war has disrupted supply chains and raised commodity prices, creating risks for businesses.
The International Monetary Fund projects India’s growth at 6.4% for FY27, still among the fastest globally. Sustained reforms and higher investment rates of 34% to 35% of GDP will be needed to achieve 8% growth in the future.