What Do Economists from Lucknow and Chennai Think of India's Projected GDP Growth of 7.8% in Q1 FY26?

New Delhi, Aug 30 (NationPress) Economists from Lucknow and Chennai have praised India's anticipated GDP growth of 7.8 percent for the first quarter of the financial year 2025-26, attributing this positive outlook to strong consumer demand. Despite facing global challenges, including US tariff increases, analysts assert that the Indian economy is exhibiting impressive resilience.

Siddharth Kalhans, an economic analyst from Lucknow, remarked that this forecast is a significant sign of India's positive economic trajectory.

“This indicates our growth curve is ascending steadily, even outpacing the RBI’s forecasts. The influence of the recent Union Budget is becoming evident, and the anticipated impact of US tariffs is only expected to result in a minor 0.5 percent decline—negligible for a major economy like ours,” he stated.

Similarly, economist Suriya Narayanan from Chennai acknowledged the optimistic trend.

“The GDP growth has exceeded expectations. India has demonstrated its capacity to endure global economic hurdles such as tariff increases. While the RBI predicted a 6.5 percent rise, the actual figures indicate a stronger performance. To maintain this growth trajectory, we must concentrate on fortifying our export sector,” he added.

Experts contend that India's diversified trade network, exporting to over 100 countries, plays a vital role in mitigating external shocks, ensuring the economy remains on a steady growth path.

India’s real GDP growth increased to 7.8 percent year-on-year in the first quarter of this fiscal year, up from 7.4 percent in the fourth quarter of the previous fiscal year.

“Growth from the supply side saw a rebound of 7.6 percent, driven primarily by the services sector, aided by a statistical low-base effect. The manufacturing sector benefited from reduced input costs alongside rising domestic demand and increased export shipments,” stated Dipti Deshpande, Principal Economist at Crisil.

Healthy consumer demand—supported by robust rural incomes, declining inflation and interest rates, and tax relief—is expected to remain strong in upcoming quarters, bolstering overall GDP growth. Additionally, increased government investment spending is anticipated to provide ongoing support.

On the demand side, the primary driver, household consumption, rose to 7 percent from 6 percent. Government spending also accelerated, with improvements in government consumption expenditure and investment.

The front-loading of capital expenditure by both state and central governments (combined at 27.8 percent year-on-year during the quarter) significantly contributed to growth. A preemptive escalation in exports prior to US tariff hikes also aided this trend.

“However, India’s export advantages may diminish in the coming quarters due to the 50 percent tariff increases imposed by the US. A broader global slowdown instigated by these tariff policies could further dampen external demand,” remarked Deshpande.

Moreover, increased US tariffs and heightened uncertainty could adversely affect domestic private investments this fiscal year. These tariffs, alongside a global trade slowdown and geopolitical uncertainties, are expected to exert a varied impact on the Indian economy.

In the absence of a trade agreement between India and the US, certain sectors will need to prepare for a more significant impact due to US tariffs.

Particularly, the micro, small and medium enterprises sector, which represents 45 percent of India’s total exports, faces considerable challenges, according to Crisil.