India cements position as fastest-growing major economy with 5-quarter high GDP growth of 7.8%: Key takeaways

India's gross domestic product (GDP) expanded 7.8 per cent in the April-June period, beating economists' expectations and better than the Reserve Bank of India's annual forecast, official data showed on Friday. The latest official reading marked the highest rate recorded in five quarters, cementing India's position as the fastest-growing major economy.

Economists polled by Zee Business had pegged the June-quarter GDP growth rate at a flat 6.5 per cent on a year-on-year basis.

The GDP growth rate was higher than the 6.5 per cent recorded in the corresponding period a year ago. It also beat foreign agency forecasts by a wide margin. Credit rating agency S&P has forecast the country's GDP to expand 6.8 per cent annually over the next three years.

The country's GDP expanded at the fastest pace in five quarters in the April-June period, according to official data.

Here are five key takeaways from the latest GDP data:

• The latest reading comes roughly three weeks after the RBI left the economy's GDP growth rate for the current financial year unchanged at 6.5 per cent, while raising its annual inflation projection to 3.1 per cent from 3.7 per cent.
• ​Real GVA growth in the agriculture and allied sector was recorded at 3.7 per cent in the first quarter of FY26, as against 1.5 per cent a year ago. GVA gives a more accurate picture of sectoral contribution to macroeconomic data, as it excluded taxes and subsidies.
• Secondary sectors like manufacturing and construction registered growth rates of 7.7 per cent and 7.6 per cent, respectively.
• The electricity, gas, water supply and other utility services group saw modest growth of 0.5 per cent.

Areas like agriculture, manufacturing, and financial, real estate and professional services account for 55 per cent of the country's overall GDP.

• Overall nominal GDP witnessed 8.8 per cent growth in Q1. Nominal GDP gauges the total value of goods and services produced within the economy without taking price changes (inflation or deflation) into account. Most economists consider real GDP figures as a more practical measure of economic output as such data takes into account the impact of inflation or deflation.

Risks remain on the horizon: Ambit Capital

"The recently imposed 50 per cent US tariffs would be key risk to India’s GDP growth as labour-intensive sectors like textiles and jewelleries would be the most affected," said Ambit Capital.

"At the same time tepid urban consumption and employment trends, and an uncertain external environment could continue to weigh in on private sector capex," it added.