India’s Q1 FY26 GDP growth at 7.8% beat market expectations by almost 100 bps
Download ReportQuantEco Research | Q1 FY26 GDP - Front loading economic activity amidst tariff jitters
India GDP growth upside appears to be more fortuitous – stemming from strong pace of government capex spending, front-loading of manufacturing activity amidst impending tariffs, favorable Southwest monsoon performance and a low deflator. All these factors offered considerable support to consumption as well as investment in Q1 FY26, by a proportion higher than anticipated. Having said, a sanguine macroeconomic economic environment is staring at strong external headwinds over the next three quarters. Taking on board the sum of positives (income tax cuts announced in the Budget, transmission of past rate cuts and the recently announced rationalization of GST rates, and negatives (US tariff of 50% on India as a base case), before today’s data release, we were anticipating a downside to our FY26 growth estimate of 6.4% to the tune of 0.3-0.4% in FY26. However, the near 100 bps upside in Q1 FY26 GDP growth data alone, compels us to leave our FY26 growth view unchanged. It also perhaps slims down the chances of a final 25 bps rate cut that we were penciling in for Oct-25.