India’s GDP growth of 7.8 per cent in the first quarter once again exceeded expectations, continuing a pattern seen over the past several quarters. Growth surpassed both the median forecast of 6.8 per cent by professional forecasters and the RBI’s revised projection of 7 per cent. The outperformance underscores the strength of India’s domestic drivers and its ability to navigate an increasingly uncertain global environment.

Even amid continuing conflict in West Asia and weather-related uncertainties, high-frequency indicators had signalled strong momentum across sectors. Robust industrial activity, healthy consumption and strong goods exports, alongside accelerating government investment, were the key drivers of growth in the first quarter of this fiscal.

The residual impact of policy measures introduced last fiscal year, coupled with continued support through direct benefit transfers, also bolstered growth. Such programmes have expanded steadily, with 17 states now providing cash transfers, primarily to women.

The impact of GST rate cuts was particularly visible in the automobile sector. Dealer discounts and higher disposable incomes resulting from income-tax relief provided additional support. According to data from the Society of Indian Automobile Manufacturers, sales of passenger vehicles, commercial vehicles and two-wheelers rose 26 per cent, 20.3 per cent and 18.3 per cent respectively in the first quarter.

Retail credit growth remained robust with other personal loans, a proxy for short-term consumption, growing at 14.2 per cent. Also, households were cushioned against the sharp rise in crude prices with government and oil companies absorbing most of it, particularly in the initial phase of conflict.

That said, as 2026-27 progresses, the........

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