India economy shows resilience in growth momentum
India economy delivered an unexpected boost in the April–June quarter, expanding at 7.8%, the fastest pace in five quarters. The performance defied forecasts of slower growth and reinforced India’s status as one of the fastest-growing major economies in the world. According to government data, gross value added (GVA) also rose strongly at 7.6%, signaling that underlying economic activity remains solid.
The stronger performance came at a time when global challenges, especially the sudden hike in U.S. tariffs on Indian imports, are creating uncertainty. The U.S. move doubled tariff rates on a wide range of Indian goods, taking them as high as 50%. Exports in sectors such as textiles, leather, and chemicals are likely to feel the pressure in the coming quarters. Despite this, India economy has shown resilience, supported by domestic demand, rural consumption, and government expenditure.
Consumer spending, which makes up nearly 57% of GDP, grew 7% year-on-year in the April–June period, reflecting rising rural demand and firm sales of durables and farm equipment. Government spending also recovered strongly, rising 7.4% after contracting in the previous quarter. These factors helped offset some of the external headwinds and kept growth momentum intact.
India economy faces tariff risks but maintains optimism
The expansion in India economy was broad-based, with manufacturing output rising 7.7% compared to 4.8% in the previous quarter, while construction grew by 7.6%, though slower than the double-digit pace earlier. Agriculture expanded more modestly at 3.7%, reflecting seasonal pressures, but still contributed to overall growth.
The government has announced that it will support industries affected by U.S. tariffs, with proposals including tax cuts to boost demand. Earlier this year, income tax reductions were rolled out, which helped support household consumption. Economists believe that additional fiscal measures in the coming festive season could further encourage spending and keep demand stable.
At the same time, experts caution that U.S. tariffs could weigh on exports and private investment if they remain in place for long. Exporters estimate that nearly 55% of India’s $87 billion worth of shipments to the U.S. could be affected. Analysts warn that prolonged trade barriers could trim India’s growth rate by up to 0.8 percentage points over the year, potentially reducing competitiveness against rivals such as Vietnam, Bangladesh, and China.
Despite these concerns, policymakers remain confident. India’s Chief Economic Adviser V. Anantha Nageswaran emphasized that growth would remain within the 6.3% to 6.8% range for the full year, even after factoring in the tariff shock. Analysts also highlight that India economy continues to benefit from structural reforms, strong domestic consumption, and increasing capital expenditure, which should cushion external challenges.
India economy outlook ahead
While real GDP growth continues to impress, nominal GDP growth, which accounts for inflation, slowed to 8.8% in April–June from an average of nearly 11% over the last two years. Economists say this moderation may weigh on corporate profits and stock markets. Already, India’s rupee has slipped to record lows against the U.S. dollar, and equity indices are facing pressure for a second consecutive month.
Still, India economy remains among the few major global economies showing strong expansion. With consumer demand holding steady, manufacturing picking up, and government support on the way, the near-term outloo k remains cautiously optimistic. Much depends on how trade relations with the U.S. evolve and whether global uncertainty continues to disrupt exports and investments. Also Read: Warren Buffett 95 Birthday Marks the End of an Extraordinary Era
Conclusion
India economy at 7.8% growth in the April–June quarter highlights both its resilience and challenges. Strong domestic demand and government spending are driving expansion, while rising U.S. tariffs pose risks for the months ahead. Even as external headwinds build, India is expected to maintain one of the world’s fastest growth rates, reinforcing its role as a key driver of the global economy.
