What Factors Are Driving India’s GDP Growth to 7.8%?

New Delhi, Aug 31 (NationPress) The recent GDP results from India showcase a robust trend fueled by significant public expenditure, a rebound in rural demand, and a thriving services sector that continues to propel the economy despite international challenges, industry experts noted on Sunday.

The National Statistics Office (NSO) has reported that India's GDP experienced a growth of 7.8 percent during the April-June quarter of the fiscal year 2025-26 (Q1 FY26), marking the fastest growth rate in the past five quarters.

This growth figure not only surpassed the Reserve Bank of India’s forecast of 6.5 percent but also represented a significant increase from the 6.7 percent recorded in the same quarter of the previous year, which was the weakest in 15 months.

In an exclusive conversation with IANS, leaders from Laghu Udyog Bharati emphasized that the government's capital expenditure, which increased by 52 percent, has been instrumental in fostering this growth.

They further mentioned that reforms like the rationalization of GST, potential reductions in the RBI’s policy rates, and favorable monsoon conditions could enhance consumption in the upcoming quarters.

Laghu Udyog Bharati National President Ghanshyam Ojha stated, "The NSO statistics clearly indicate that India's economy is on a solid trajectory. The 7.8 percent growth rate demonstrates that public expenditure and strong domestic demand are positively impacting the economy, despite global trade challenges."

State Vice President Mahavir Chopra underscored the performance of all three core sectors.

"The primary, secondary, and tertiary sectors have shown remarkable growth rates of 2.8 percent, 7 percent, and 9.3 percent respectively. This balanced growth is a promising sign for the economy," Chopra stated to IANS.

Pankaj Bhandari, head of the Laghu Udyog Bharati’s Jodhpur chapter, remarked that India’s growth is driven by three key pillars: government spending, recovery in rural demand, and the vigor of the services sector.

He also highlighted that the construction and agriculture sectors are expected to maintain high growth rates.

"We anticipate that construction and agriculture will continue to spearhead growth in the forthcoming quarters," he mentioned.

Sectoral analysis reveals that the primary sector, comprising agriculture and mining, increased by 2.8 percent, compared to 2.2 percent last year.

Agriculture, in particular, achieved an impressive growth rate of 3.7 percent, more than doubling the 1.5 percent observed during the same period last year.

The secondary sector, driven by manufacturing and electricity, grew by 7 percent.

Manufacturing saw a 7.7 percent increase, marginally up from last year’s 7.6 percent, while construction activities remained robust.

The tertiary sector exhibited the strongest performance with a 9.3 percent growth rate, significantly higher than the previous year’s 5.4 percent.

Within this sector, trade, hotels, transport, communication, and broadcasting services expanded by 8.6 percent, while financial, real estate, and professional services grew by 9.5 percent.

Public administration and defense also rose by 9.8 percent, up from 9 percent a year prior. India's exports of goods and services recorded a 5.9 percent growth in the quarter, bolstered by consistent demand from markets like the United States.