CEA Nageswaran Projects 6.3–6.8% Growth for India in FY26 as Q1 GDP Surges to 7.8%

Chief Economic Advisor (CEA) V Anantha Nageswaran on Friday said he remains confident that the Indian economy will grow between 6.3% and 6.8% in FY26, driven by strong domestic demand, despite global uncertainties and the recent 50% US tariff hike.

His remarks came after official data from the Ministry of Statistics showed that India’s economy expanded by a robust 7.8% in the April–June quarter of FY26, well above the 6.5% growth recorded in the same quarter of the previous year. The figure also surpassed the Reserve Bank of India’s (RBI) projection of 6.5% for Q1.

“Despite the reciprocal and penal tariffs imposed by the US, and after seeing the resilience of Q1 growth, we are retaining the growth rate projections for the current fiscal at 6.3–6.8%,” Nageswaran said at a media briefing in Delhi. He added that the downside to GDP growth for this fiscal is unlikely to be significant, and that the steep tariffs may prove short-lived, with India and the US already in talks to resolve the issue and pursue a bilateral trade deal.

Sectoral Drivers of Growth

The rebound in agriculture was a major contributor, with the sector expanding by 3.7%, up sharply from 1.5% last year when erratic monsoons hit output.

• Manufacturing grew by 7.7%,

• Construction rose 7.6%, and

• Services, the largest segment of the economy, surged 9.3%, compared to 6.8% in Q1 last year.

On the investment side, Gross Fixed Capital Formation climbed 7.8%, up from 6.7% a year ago, reflecting stronger capital spending. Government consumption also accelerated, growing 9.7% in nominal terms, more than double the 4% growth seen last year.

The data highlighted robust rural demand and public investment, supported by spending on highways, railways, ports, and airports. However, private final consumption showed a slower pace of growth compared to the same period last year.

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Policy Support and Outlook

RBI Governor Sanjay Malhotra said growth momentum should remain strong, supported by an above-normal monsoon, easing inflation, rising capacity utilisation, and favourable financial conditions. He added that continued government capital expenditure and buoyant services would provide further impetus.

Global institutions share this optimistic view. The International Monetary Fund (IMF) has projected India to remain the only major economy expected to grow above 6% in 2025–26, even as global trade faces disruptions and tariff tensions.

Looking ahead, CEA Nageswaran said he expects aggregate demand growth to hold firm, aided by a possible GST rate cut and the upcoming festive season, which should provide an additional boost to consumption.

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