India’s economy expanded at a faster-than-anticipated rate in the April to June quarter, official figures released Monday indicated, easing concerns that the conflict in Iran would significantly disrupt growth in Asia’s third-largest economy. Gross domestic product (GDP) increased by 7.8 percent year-on-year during the period, surpassing market forecasts of 7.3 percent growth, although it was lower than the revised 8.6 percent growth recorded in the previous quarter.
The growth was primarily driven by the services sector, while manufacturing delivered an unexpected boost with a 9.2 percent rise, according to analysis from Teresa John of Nirmal Bang Institutional Equities. Prime Minister Narendra Modi described the performance as a “herculean feat” achieved despite challenges posed by rising oil prices and supply chain disruptions. Modi highlighted the resilience of the Indian economy in a social media post, stating, “Doomsayers were doomed and India bloomed... yet again!”
The data solidifies India’s position as the fastest-growing major economy globally and provides a positive signal for the Modi administration, which has faced political challenges alongside complex policy issues. The year had begun with strong economic momentum and progress on an interim trade agreement with the United States, but negotiations later stalled, and the outbreak of conflict in the Middle East added further pressure by raising energy costs.
India is heavily dependent on oil and gas imports, exposing it to the volatility triggered by the Iran war. Initially, this geopolitical tension and associated energy price shocks led the Reserve Bank of India to lower its economic growth projections for the current fiscal year. However, these growth forecasts were modestly adjusted upward following subsequent developments.
Despite the external pressures from the energy market and geopolitical uncertainties, India’s economy demonstrated notable resilience in the second quarter, supported by diverse sectors and consumption trends. This growth report underlines the country’s capacity to navigate global headwinds while maintaining robust expansion.