India experienced higher-than-expected economic growth, which was underpinned by demand, investment, and resiliency. Analysts attributed India's economic growth, underpinned by demand, private consumption, and resiliency, to its ability to withstand the shock from the war in West Asia, which escalated during March.
Data released by the National Statistical Office (NSO) on Friday (June 5, 2026) showed gross domestic product (GDP) growth eased to 7.8 percent in the January-March quarter from 8 percent in the preceding three months. It has taken full-year growth to 7.7 percent, above the second advance estimate of 7.6 percent.
"The growth was despite headwinds from the West Asia conflict," said Dharmakirti Joshi, chief economist at CRISIL. She noted that fourth-quarter growth remained well above the average pace recorded over the previous 10 quarters.
Rumki Majumdar, economist at Deloitte India, said the expansion was broad-based and underpinned by both demand and production. Gross value added (GVA) growth of 7.9 percent exceeded GDP growth. It reflects strength across services, manufacturing and construction.
Despite the robust nature of the growth in India, there is uncertainty in the international scenario that can affect its exports and investment activities as well as sentiments. Sustaining growth will depend on balancing domestic strengths against external risks and policy challenges.
CRISIL maintained its FY27 GDP growth forecast at 6.6 percent, while HDFC Bank projected growth at 6.5 percent. The calculations were conducted considering average crude oil prices of about USD 95 per barrel. Both institutions warned that rising input costs, weaker exports, elevated inflation and a potential moderation in investment activity could dampen economic momentum.
"In fiscal 2027 (April 2026 to March 2027 financial year), growth is set to weaken amid multiple headwinds, including higher prices of crude and other commodities, softer global growth and forecast of a below-normal monsoon. Global supply chain disruptions are already intensifying cost pressures and reduced input availability is expected to add to the pressure," said Joshi of CRISIL.
"We maintain our GDP growth forecast for fiscal 2027 at 6.6 percent, with risks tilted to the downside. Despite the slowdown in real GDP, the nominal GDP growth is set to be higher due to higher inflation based on both the Wholesale Price Index and the Consumer Price Index," Joshi added.
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India's economy expanded at a faster-than-expected rate in fiscal 2026 but economists cautioned that growth is likely to moderate this year amid rising energy costs and global uncertainty linked to the West Asia conflict.
"Policymakers also acknowledged downside risks to their baseline growth outlook stemming from uncertainty over the duration and intensity of the conflict. Nevertheless, they are likely to raise interest rates if the inflation outlook evolves in line with the projections presented in their quarterly forecast," Majumdar added.
Analysts expect growth to slow in fiscal 2027 as higher crude oil and commodity prices, softer global growth, supply-chain disruptions and the prospect of a below-normal monsoon weigh on activity.