NEW DELHI, June 5 : India's economy grew at an unexpectedly strong 7.8 per cent on-year in the January-March quarter, the government said on Friday, as better farm output and brisker construction activity helped offset weakening external demand emanating from the Middle East conflict.The print, the second in an updated data series with a revised base year and wider coverage, was well above a forecast of 7.2 per cent growth in a Reuters poll of economists. Compared with the previous three months, however, the January-March reading marked a marginal slowdown. The government revised up growth for the previous three months to a reading of 8.0 per cent from an earlier 7.8 per cent.Gross value added, a more accurate measure of underlying economic activity, grew 7.9 per cent during the January-March quarter, the data showed. GVA strips out the volatile components of national accounts such as indirect taxes and government subsidies.
India estimates GDP growth for the full year that ended in March at 7.7 per cent, the National Statistics Office said, compared with a forecast of 7.6 per cent from February.The country's chief economic adviser, V Anantha Nageswaran, had forecast economic growth in the current fiscal year at 7 per cent to 7.4 per cent in a projection issued before the Middle East conflict began.India has been one of the economies hardest hit by the Iran war that has stretched into a fourth month with no immediate prospects of a peace deal between Washington and Tehran. India is the world's third-largest crude importer and consumer, and it is heavily dependent on supplies from the Middle East.The Middle East war is seen pulling down growth in the Indian economy to 6.6 per cent this fiscal year, the central bank said earlier in the day, as it kept its benchmark interest rate unchanged while signalling a possible hawkish shift due to inflation pressures and weakness in the rupee.Domestic inflation is set to pick up and fiscal and current account balances are set to widen, which has battered financial markets.A disappointing monsoon, with the lowest rainfall in 11 years, could hurt growth going ahead.Manufacturing output rose 7.3 per cent year-on-year in January-March, compared with a revised expansion of 12.8 per cent in the previous quarter, while construction activity stood at 8.4 per cent, up from revised growth of 6.7 per cent in the previous quarter.Growth in farm output, a sector which employs more than 40 per cent of the country's enormous workforce, came in at 3.6 per cent in the fourth quarter of 2025/26 compared with a revised 1.7 per cent a quarter earlier.
