Girls buy a rakhi from a roadside stall in Nagaon District, Assam, India, on August 26, 2026, ahead of Raksha Bandhan, a Hindu festival celebrating the bond between brothers and sisters.
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India’s economy grew by 7.8% in the quarter to the end of June, mainly driven by strong performance of the financial, real estate, information technology and professional services sectors.
The reading is comfortably above a Reuters poll of expectations for 7.1% growth and follows 7.8% growth in the previous quarter.
While agriculture and allied sectors reported tepid growth, the performance of manufacturing and services sectors sharply improved in the June quarter, India’s Ministry of Statistics and Program Implementation said in a release on Monday.
The Iran war has not impacted India’s growth as feared, Aastha Gudwani, India chief economist at Barclays, told CNBC’s Inside India earlier.
Of the 20 high-frequency indicators tracked by Barclays, only seven put the April-to-June quarter average growth rate slower than the Jan-March quarter, she explained, adding that consumer demand has stayed “robust.” Manufacturing and service sectors, automobile sales and loan growth are also holding up really well, she added.
Earlier in the month, India’s central bank warned that even as the country’s economy had remained “resilient” amid geopolitical uncertainty, growth was expected to slow over this financial year.
The Reserve Bank of India had estimated that India’s economy would grow by 7.0% in the three months ending June and 6.7% during the financial year ending March 2027.
The central bank expects “the turbulent global economic environment” to have an impact on domestic economic activity as energy prices and supply chain pressures remain “elevated and uncertain.”
The El Niño conditions could lead to a deficient and uneven south-west monsoon and pose risks to India’s farm sector and rural demand, the central bank said earlier this month.
The impact of high energy prices is already being felt in India, with the country’s inflation climbing steadily for nine straight months to 4.45% in July. Yet the RBI, unlike some of its Asian peers, did not hike interest rates in its August policy.
