The GDP growth data released on Friday simultaneously portray recent economic strength and reveal some reasons for worry. The provisional estimates of GDP growth for 2025-26 have been pegged at 7.7%, which is marginally higher than the 7.6% predicted by the government in February. This suggests that March, the first full month since the West Asia crisis erupted, did not see enough of an impact to affect the full year’s growth. That resilience will be dented in the months ahead. The data also showed that several key sectors of the economy, such as manufacturing and several services sectors, grew by double digits over and above a relatively high base. These are all good signs for an economy heading into severe supply-related headwinds due to the war in Iran. Notably, both Private Final Consumption Expenditure and Gross Fixed Capital Formation — metrics of household consumption and government and private sector investment activity, respectively — grew faster in 2025-26 than they did in the previous year. The consumption growth is especially welcome given that it had been at a tepid 5.8% for the previous two years. It remains to be seen how much of the investment growth was driven by the private sector. Even if this growth was driven by government spending, it has positive knock-on effects on the rest of the economy.The weakness in the agriculture sector, however, is something to worry about. The sector’s growth slowed to 3% in 2025-26 from 4.2% in 2024-25, despite the 2025 monsoon having concluded at 108% of its long period average (LPA). This is dire news, given that the India Meteorological Department has predicted that this year’s monsoon will only be 90% of the LPA. That is not counting the fertilizer supply constraints that will really be felt in the months ahead. The data also show the rising dominance of services in the economy, with their share rising to 54.3% of total gross value added (GVA) in 2025-26, up from 51.9% in 2022-23. The agriculture sector, which continues to employ the largest share of the population by far, saw its share in GVA fall to below 20% from 22.1% in 2022-23. The manufacturing sector’s share has remained largely unchanged, another cause for concern. This suggests that India is not growing its value-added manufacturing sector fast enough. The Reserve Bank of India (RBI), government, and independent economists are in agreement that 2026-27 will see growth slowing significantly. The RBI predicted growth will dip to 6.6%, and the Chief Economic Adviser said that he saw no need to second-guess this estimate. Last year’s tariff-related disruptions were a test of India’s export resilience. This year’s energy supply disruptions will test the entire economy as well as the government’s policy agility. Published - June 08, 2026 12:30 am IST